GUANGZHOU AUTO SHOW: Automakers see era of slower growth

   Date:2015/11/24
Executives gathered at the biggest motor show in southern China agreed that the days of exponential growth are over, underscoring how a sharp economic slowdown has tempered expectations.
 
At the Guangzhou auto show on Friday, Volkswagen China Executive Vice President Soh Weiming predicted that industry sales of passenger vehicles may expand 3 to 5 percent next year.
 
Jiang Jun, president of FAW Toyota Motor Sales Co., said the company won't set high targets for its dealers in 2016 so that they can "regain strength." Hubertus Troska, head of China for Daimler AG, noted the heavier discounts in the market while Infiniti CEO Roland Krueger said growth was "normalizing."
 
"Of course it's not as good as before, when you have those double digits but hey, with this base and with this growth, that is impressive," Soh told reporters. He added that he expects 2016 to be better than 2015. The company said it will introduce more crossovers and minivans to tap demand in those segments.
 
The more guarded mood reinforces predictions this year that car sales in China have entered a "new normal," with the economy expected to expand at the slowest pace since 1990.
 
In past years, automakers used China's auto shows to trumpet multibillion-dollar spending plans. This year, Volkswagen announced it would delay plans to increase its stake in a key Chinese manufacturing joint venture after an investment review in the wake of its emissions-rigging scandal.
 
"The new normal is much slower growth than the explosive growth in the past, and is very dependent on technology as well as government policy," said London-based Namrita Chow, principal analyst for China at IHS Automotive. "It will be a fight to attract customers with better technology, features and fuel economy with models that will have to be more targeted."
 
Total vehicle sales, including trucks and buses, may increase 3 percent this year, predicted Dong Yang, secretary general of the state-backed China Association of Automobile Manufacturers. That contrasts with the average 36 percent growth in the past 10 years, according to data from Bloomberg Intelligence.
 
The slowdown prompted the association to lobby for stimulus measures, and the government responded by cutting a purchase tax covering 70 percent of the market for passenger vehicles. October sales surged after the tax cut, providing respite to carmakers and struggling dealers.
 
To adjust to the slowing growth, FAW Toyota's Jiang said the company will expand its dealer network in smaller and less-developed cities instead of the major metropolitan areas, where vehicle sales are reaching a saturation point.
 
"Considering the market slowdown, we need to give dealers room," he said. "So we won't give them too much pressure and won't set overly ambitious targets. We would like to reserve resources and lay the groundwork for long term growth."
 
The muted comments have left Robert Parker, head of Ford's premium Lincoln brand in China, among the more optimistic among his peers.
 
"We're going to be surprised by how the market is going to recover next year," he said. "I don't think it's going to be a hockey stick, but I think we're to see more growth than we've experienced the last six months. The last couple of months have looked promising."

Source:Automotive News China

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