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Autoshow puts muffler on hedonism
By Andrew Thomson |
May 20, 2013, Monday
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Print Edition
Print Edition
THIS year's Shanghai automotive show was yet another demonstration of China's importance to the global automotive industry, sending a clear signal that the Chinese market is still everyone's favorite investment destination.
In our KPMG 2013 Global Automotive Executive Survey, 70 percent of the executives we talked to identified China as their top choice for investment, ahead of the other BRIC countries of India, Russian and Brazil.
Additionally, 94 percent of respondents said they expect China to experience continued growth in domestic vehicle sales, underpinned by rising middle class incomes and growing urbanization.
After the "idealism" of the 2011 auto show, when electric vehicles were the stars, and after the "hedonism" of the 2012 show, when luxury cars and SUVs dominated the red carpet, this year's exhibition showed a little more "realism."
According to the Chinese Association of Automotive Manufacturers, light vehicle sales growth in the first quarter of 2013 was 17 percent, based largely on a strong performance in the SUV segment. Most analysts are predicting somewhere in the region of 10 percent growth for this year as a whole, with the premium/luxury and SUV segments expected to outpace the average.
While this level of growth offers excellent prospects for most original equipment manufacturers, it is not stellar compared with prior years. Uncertainty, however, is decreasing, with no major policy interventions, stimulus or cooling measures likely in the near term.
Thus, the auto sector in China is probably in a healthy state of "realism" right now. Volatility has eased, growth is more predictable and the industry can develop and execute capital expenditure, production capacity and marketing plans with greater confidence.
At this point, KPMG predicts that light vehicle sales growth for 2013 will be in the region of 11 percent.
Getting back to the auto show, "realism" was reflected by fewer flashy, new vehicle launches and more by way of substantive changes in the vehicle types driving the market. There was also some evidence of an increasing maturity among domestic Chinese manufacturers, some of whom have rationalized their brands and tailored products more to what Chinese consumers want.
However, there is still a long way for them to go. Chinese automakers are clearly trying to close the technology gap with foreign competitors, but they still lack systems-integration expertise and durability in their cars.
We notice other highlights of the Shanghai auto show:
The China launch of the Qoros 3 sedan. Following its highly successful debut at the Geneva auto show earlier this year, this Israeli joint venture with domestic automaker Chery gave Chinese consumers their first taste of an exciting new product. Blending Western design and technology with Chinese tastes, the car will start sales in China and Europe in the second half of this year. It will be pitted against highly competitive C-segment vehicles, such as VW's Sagitar. The Qoros 3 sedan will be priced at between 130,000 yuan (US$ 21,000) and 180,000 yuan.
The launch of a wide range of production and concept SUVs, compact SUVs and crossover vehicles. BMW showed its Concept X4; Mercedes, its GLA Concept; and Citroen DS, its Wild Rubis Concept. VW exhibited its four-door concept crossover vehicle, based on its MQB shared-module construction. There were also offerings from Ford, Fiat-Chrysler and Guangzhou Automotive.
"Prettiest Car of the Show" honors probably go to the Buick Riviera concept vehicle, which was launched at a VIP event on the eve of the auto show.
Based on what we saw at the show, we expect the following this year:
Continued growth and investment, particularly by foreign automakers targeting, for example, additional capacity and dealership expansion into China's central and western regions.
A continuing focus on the SUV and luxury vehicle segments, mitigated only by a possible tempering of interest in high-end vehicle sales amid a government crackdown on ostentatious displays of wealth by officials.
A potential policy revision refocusing incentive support from all-electric vehicles to plug-in and regular hybrids. The government may decide to direct subsidies toward consumers and not vehicle manufacturers.
Accelerated development of the used-car market.
Increasing Chinese outbound investment, especially in European and US vehicle technologies.
In our KPMG 2013 Global Automotive Executive Survey, 70 percent of the executives we talked to identified China as their top choice for investment, ahead of the other BRIC countries of India, Russian and Brazil.
Additionally, 94 percent of respondents said they expect China to experience continued growth in domestic vehicle sales, underpinned by rising middle class incomes and growing urbanization.
After the "idealism" of the 2011 auto show, when electric vehicles were the stars, and after the "hedonism" of the 2012 show, when luxury cars and SUVs dominated the red carpet, this year's exhibition showed a little more "realism."
According to the Chinese Association of Automotive Manufacturers, light vehicle sales growth in the first quarter of 2013 was 17 percent, based largely on a strong performance in the SUV segment. Most analysts are predicting somewhere in the region of 10 percent growth for this year as a whole, with the premium/luxury and SUV segments expected to outpace the average.
While this level of growth offers excellent prospects for most original equipment manufacturers, it is not stellar compared with prior years. Uncertainty, however, is decreasing, with no major policy interventions, stimulus or cooling measures likely in the near term.
Thus, the auto sector in China is probably in a healthy state of "realism" right now. Volatility has eased, growth is more predictable and the industry can develop and execute capital expenditure, production capacity and marketing plans with greater confidence.
At this point, KPMG predicts that light vehicle sales growth for 2013 will be in the region of 11 percent.
Getting back to the auto show, "realism" was reflected by fewer flashy, new vehicle launches and more by way of substantive changes in the vehicle types driving the market. There was also some evidence of an increasing maturity among domestic Chinese manufacturers, some of whom have rationalized their brands and tailored products more to what Chinese consumers want.
However, there is still a long way for them to go. Chinese automakers are clearly trying to close the technology gap with foreign competitors, but they still lack systems-integration expertise and durability in their cars.
We notice other highlights of the Shanghai auto show:
The China launch of the Qoros 3 sedan. Following its highly successful debut at the Geneva auto show earlier this year, this Israeli joint venture with domestic automaker Chery gave Chinese consumers their first taste of an exciting new product. Blending Western design and technology with Chinese tastes, the car will start sales in China and Europe in the second half of this year. It will be pitted against highly competitive C-segment vehicles, such as VW's Sagitar. The Qoros 3 sedan will be priced at between 130,000 yuan (US$ 21,000) and 180,000 yuan.
The launch of a wide range of production and concept SUVs, compact SUVs and crossover vehicles. BMW showed its Concept X4; Mercedes, its GLA Concept; and Citroen DS, its Wild Rubis Concept. VW exhibited its four-door concept crossover vehicle, based on its MQB shared-module construction. There were also offerings from Ford, Fiat-Chrysler and Guangzhou Automotive.
"Prettiest Car of the Show" honors probably go to the Buick Riviera concept vehicle, which was launched at a VIP event on the eve of the auto show.
Based on what we saw at the show, we expect the following this year:
Continued growth and investment, particularly by foreign automakers targeting, for example, additional capacity and dealership expansion into China's central and western regions.
A continuing focus on the SUV and luxury vehicle segments, mitigated only by a possible tempering of interest in high-end vehicle sales amid a government crackdown on ostentatious displays of wealth by officials.
A potential policy revision refocusing incentive support from all-electric vehicles to plug-in and regular hybrids. The government may decide to direct subsidies toward consumers and not vehicle manufacturers.
Accelerated development of the used-car market.
Increasing Chinese outbound investment, especially in European and US vehicle technologies.
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