A new Chinese dynasty
02 May 2007
Guy Bird is our editor-at-large and political columnist
Laugh at BMW X5 rip-offs now but the Chinese car industry could be in the driving seat sooner than you think, writes Guy Bird
If you need proof of China's massive rise in global automotive importance, here are a few statistics: Last year the country overtook Japan to become the second biggest vehicle market in the world with 7.2 million annual sales (3.8m of which were passenger cars). That was a rise of some 25% year-on-year; madder still, there were no private car sales at all until 2001, and no business sales before 1999 - the only cars on the road prior to 1999 were run by the government.
Given these incredible incremental rises, estimates that predict the Chinese market snatching number one spot off current incumbents the USA (with 16.5m annual sales) by 2020 look conservative.
The overall Chinese economy's recent growth is unprecedented in modern times. According to one source, it has grown up to seven times in size in just 20 years - by comparison Japan has 'only' grown six times in 25 years, the USA three and half times in 60 years and the UK three and half times in a tortoise-like 100 years.
Of course, these stats don't mean that next year you'll be swapping your Mondeo and 3-series saloons for cheaper Chinese brands. Much of the automotive sales growth is made up of foreign carmakers selling in the country, and in many cases making their cars there, too, as part of joint ventures with domestic carmakers. But those domestic carmakers - like Geely, Chery, Nanjing and SAIC - are learning fast.
“The overall Chinese economy's recent growth is unprecedented in modern times. According to one source, it has grown up to seven times in size in just 20 years - by comparison Japan has 'only' grown six times in 25 years, the USA three and half times in 60 years and the UK three and half times in a tortoise-like 100 years.”
Short term, some brands are blatantly copying BMW X5 rear ends and Merc CLK cabrio fronts, but others are hiring in the personnel needed to fast-track that learning curve or buying the company with that expertise lock, stock and barrel. Nanjing now owns MG while SAIC is selling old Rover 75s as Roewe 750s. Both made their official motorshow debuts at the recent Shanghai motor show. In the case of Roewe the unveil was far more impressive than any Rover event I can remember with a hybrid Roewe 750 plus a new Rover 45-sized concept car set for production in China later this year. Aiming for a five-star EuroNCAP rating and able to meet all the European emission and pedestrian safety requirements it could well come to Europe within its product lifecycle. Meanwhile, across the corridor in another bustling hall MG launched the MG7 - or the old MG ZT. While it all looked a little familiar, in China the Nanjing-owned brand is looking to sell 100,000 a year, which makes MG and Rover's previous ZT and 75 sales efforts look paltry.
All the established global brands are now smelling the coffee and taking notice of the Chinese consumer when designing their vehicles too. Ford of Europe's director of design Martin Smith revealed that several design changes were made to the new global Mondeo specifically because of Chinese customer requirements. In fact a few enhancements to the Mondeo's centre dash arrive on Chinese models first - with Europe to follow.
Of course there are many who question how long China can keep up such massive growth, not just in car terms, but time and again in my short stay in Shanghai I heard both Chinese and Westerners alike talk of a strength of determination to succeed there - from the people themselves, to a government that's still so powerful that if it wants to, it can just 'make things happen'.
Yes, they have to get to grips with an environment that is seeing massive pollution in a short space of time, but in vehicle terms China has been able to skip loads of the dirtier engine phases the West has had to go through. From a virtual standing start eight years ago, it is already at Euro3 emissions standard on most new cars with Euro4 not far off, so don't be surprised if they find a solution to the eco agenda quicker than the West. Furthermore, don't bet against the Chinese domestic makers getting on to UK fleet lists in the next five years - under their own brands and/or through ownership of a few Western brands.