CHINA'S auto industry once again caught everybody's attention as the nation's economy continued to develop and grow robustly last year.

Despite brisk sales in the world's second-largest auto market, the pillar industry has witnessed fundamental changes as well as new trends that were memorable and revealing.

But as the market matures, the car industry also witnesses growing pains especially when it tries to drive onto the global stage.

Shanghai Daily has selected the top 10 auto news of last year and will take readers on a drive to give them an overview of trends in the sector.

South Korean car slump

Hyundai Motor Co has slashed its annual sales target in China by 16 percent to 260,000 units for last year after failing to meet the half-year sales target in 2007.

The sluggish sales also led South Korea's largest car maker to offer price discounts by as much as 13 percent on its complete product mix in the second half.

Hyundai's slower business follows another South Korea car maker, Kia Motor Corp, in seeing sales affected in the world's second-largest auto market.

Most analysts agreed it is caused by the rise of Chinese car makers with their price competitive models that dramatically squeezed out rivals in the low-to-mid class segment.

Chery goes international

Chery Automobile Co Ltd has signed an agreement with Iran's biggest car maker Khodro Corp as well as a Canada-based investment company in August to set up a manufacturing plant in Iran with a total investment of US$370 million.

The move followed its strategic partnership with United States car maker Chrysler LLC and Italy's Fiat in separate deals to jointly make foreign-branded models in China.

China's fourth-largest car maker is one of China's fastest growing auto makers and have been expanding efforts to raise capacity and improve technology through cooperation with overseas rivals.

Chery also has seven overseas plants and plans to build another 14 factories by 2010 when it targets to produce and sell one million units.

New Trademark

In October BYD Automobile Co Ltd unveiled new a trademark, which comprises the BYD alphabets centered in a red ellipse, on its dual-module electric F6 car.

The specialist in making electric batteries and a new comer to the auto industry joined other car makers, including Great Wall Motor, in changing its logo before embarking on an aggressive global expansion. Geely has plans to to also change its logo.

They are banking on new logos to pave the way for a better brand recognition in the global markets.

SAIC-Nanjing Auto merger

SAIC Motor Corp, China's largest auto maker, has agreed to buy Nanjing Auto's vehicle making assets as well as its components business at the end of last year.

The deal was the biggest merger and acquisition in the nation's auto industry after eight months of bumpy negotiations.

The M&A is also widely regarded as the launch of an industrial reshuffle under government guidelines that aims to enhance competitiveness against overseas rivals.

Both companies have pledged to share resources in planning, research and development, marketing, manufacturing and procurement under the deal.

SAIC assembles and markets Roewe-branded cars as its self-owned models while Nanjing Auto produces MG branded cars. Their models were both developed based on models made by the failed British car maker MG Rover Corp.

Fiat breaks up with NAC

Ending its eight-year partnership with China's Nanjing Automobile offered Italian car maker Fiat a last chance to speed up development and fulfill its target to sell 300,000 units in China.

Fiat gave up its stake in the joint venture, which has been losing money for a long time, due to dissatisfied cooperation and lack of new models.

The two companies will, however, maintain a tie-up in spare parts and the commercial vehicle segment as Fiat's truck division Iveco has a van venture with Nanjing Auto.

The breakup will allow Fiat to talk to other partners, including China's Chery, on the possibility of making passenger cars in China.

Nanjing Auto is undergoing a merger with China's SAIC as the central government encourages a restructuring in the industry to form auto giants that can take on western rivals.

Buoyant sales growth but pace starts to slow

China's vehicle sales remain vibrant last year as all segments expanded strongly.

Due to the nation's robust economy which has boosted people's consumption, vehicle sales accelerated 23.19 percent to 7.95 million units for the first 11 months. Compared with 7.21 million units sales for 2006 with a 25-percent sales growth over 2005, the whole-year projection of 8.5 million units for 2007 showed that the market is maturing and has begun to grow at a slower pace.

High demand for passenger cars was responsible for the sizzling vehicle sales in China. Passenger car sales climbed 22.8 percent to 5.66 million units from January to November while commercial vehicle sales hit 2.28 million units, an increase of 24 percent from a year earlier.

JV's own nameplate

Guangzhou Honda Automobile Co Ltd announced in July it planned to invest two million yuan to set up a wholly owned research and development subsidiary that will allow it to make new models under its own nameplate as early as 2010.

Shanghai Volkswagen and its foreign parent company Volkswagen also signed a joint pact to develop a new mid-to-high end car to target overseas markets.

They are among several joint ventures in China to develop models under its own nameplate to not only ease the shortage of models from its parents but also to cater to local demand with their enhanced R&D capability.

Copycat spat

BMW AG has filed lawsuits against China's Shuanghuan Auto alleging that the Chinese firm's CEO sport utility vehicle resembles the design of its X5.

It's not the first time Shuanghuan is involved in a copyright row with overseas rivals as Daimler also alleged Shuanghuan's Noble subcompact as a copy of its smaller-sized Smart Fortwo.

Fiat SpA has also alleged that the Pery made by China's Great Wall is a copy of its Panda compact car.

The Chinese auto industry has long been criticized for lacking protection of intellectual property rights during its rapid development to catch up with overseas rivals.

The IPR dispute also emerged as main hurdle for domestic car makers to tap overseas markets with their price competitiveness when a handful of Chinese cars are eager to turn themselves from assemblers to auto giants.

Declining market share

The market share of China's domestically-owned cars dropped to 22 percent in August compared with 29 percent in May last year.

Although the figure rebounded to 27 percent in November, it still trailed the 30 percent level in 2006.

The decline in market share is blamed on slowing sales in the small-engine sized car segment, which was dominated by the low-priced Chinese nameplate models.

Meanwhile, as market competition intensified, most overseas car makers also expanded their price discounts to be more price-competitive to win more Chinese customers from China's self-branded cars.

The top 10 Chinese-branded cars last year included Chery's QQ compact, FAW's Xiali compact, Free Cruiser sedan made by Geely, Brilliance Auto's Junjie sedan as well as Haima Auto's Family.

Eco-friendly promotions

The National Development and Reform Commission said in a notice in June that vehicles that meet China's second generation of emission standard will not be sold from July this year as the country would have adopted the new China III emission standard by then.

The top planner in July also released publicly the fuel consumption level of mainstream passenger cars, which drove more than 440 models out of the market for failing to meet the requirement.

Meanwhile, China also released its threshold on new energy vehicles in the middle of last year as the country is adopting higher industrial standards and government supervision to help the auto sector go green.