Carmakers look southwest for growth

By Wang Cong Source:Global Times Published: 2017/8/30 20:04:40

Foreign, domestic firms drawn by rapidly growing regional economy

Visitors take a close look at cars exhibited during the Chengdu Motor Show. Photo: IC


On a recent rainy Friday morning, local auto enthusiasts in Chengdu, capital of Southwest China's Sichuan Province, shrugged off heavy rain and battled traffic jams in the city's bustling south district to take a look at their dream cars.

"The weather really sucks," a man in his 20s remarked in Sichuan dialect as he got out of a taxi outside the New Century City International Conference and Exhibition Center, where the Chengdu Motor Show 2017 kicked off. As he and two other friends walked toward the entrance, scalpers in raincoats approached them to try and sell them tickets.

They were far from the first to brave the rain to attend the motor show, said to be the largest in Southwest China. Thousands of fans had already been inside the showrooms.

"Chengdu is one of the cities in China with a huge base of auto fans; I mean, look at all these people coming in this kind of weather," said an auto industry reporter, who has covered major auto shows both in China and abroad for years.

Inside the massive exhibition center, carmakers had crowded the halls to unveil their latest car models ranging from sports-utility vehicles (SUVs) to sedans and state-of-the-art technologies in self-driving and energy-saving.

Such a busy scene is the evidence of a huge fan base for cars in the city and the intense focus of foreign and domestic carmakers on cashing in on the base amid slowing growth in sales in the world's largest auto market.

Huge fan base

Chengdu, despite its lower standing among Chinese cities in terms of GDP and population, is one of the largest auto markets in the country, according to industry data.

With a total of 4.29 million passenger cars registered at the end of June, Chengdu's car ownership is second in the country only to Beijing, which had 5.55 million, according to data released by the Traffic Management Bureau of the Public Security Ministry on July 11.

Another mega city in Southwest China, Chongqing, ranked the third with 3.5 million passenger cars, the data showed.

Both Chengdu and Chongqing, which are about 340 kilometers apart, have maintained double-digit growth in passenger car ownership in recent years, according to media reports. In 2016, Chengdu's car ownership grew 12.7 percent from 2015 and Chongqing's rose 17.6 percent, compared to 2.4 percent growth for Beijing, the Chongqing Morning Post reported in February.

The rapidly growing markets in Chengdu and Chongqing have led to both foreign and domestic cars focusing on the regional market, according to Wu Shuocheng, a Shanghai-based independent industry expert.

"The auto market in Southwest China is highly diverse, with many areas seeing slow growth and some areas like Chengdu having some of the fastest growth in the country," Wu told the Global Times on Tuesday. "I think that is what's driving carmakers to the region."

Great potential

The region is also home to some of the fastest-growing provincial economies in the country. The five southwestern provincial-level areas - Sichuan, Chongqing, Yunnan, Guizhou and Tibet Autonomous Region - have maintained economic growth of above 8.2 percent, with Tibet seeing the fastest pace at 10.8 percent and Sichuan the lowest at 8.2 percent.

"Economic growth and car sales are positively correlated; so there is huge potential for the car market in the Southwest China region," Wu said.

Apart from the growth potential, the auto market in Southwest China is also one that could benefit both foreign high-end premium models and domestic cars, according to experts.

Propelled by robust economic growth and a local culture of spending, demand for high-end cars in southwestern cities such as Chengdu and Chongqing is particularly strong, and "may even be comparable to cities in coastal developed cities such as Shanghai," remarked Wu.

In addition, more young people are buying premium cars in cities like Chengdu, according to the National Business Daily. In 2016, high-end consumers born after 1987 accounted for more than 40 percent of buyers, up from 20 percent in 2014, the report said.

These younger, higher-end consumer bases attracted top luxury brands such as Porsche, Mercedes-Benz and BMW to the Chengdu Motor Show this year to show off their top-of-the-line models such as the Porsche 911 GT3, priced at more than 2 million yuan ($303,800). 

Domestic brands have also found a strong base in the Southwest for their cars. Four provinces in Southwest China were among the top 13 provinces for cars sale of domestic brands in the first half of 2017, with a combined 495,000 units, auto industry news site reported on July 28.

At the Chengdu Auto Show, domestic car brands such as Zhejiang Geely, Chery and newcomers such as Wey all showcased their newest models, mostly SUVs and new-energy vehicles.

Local fans also showed their admiration for Wey, a new domestic brand focusing on premium SUVs, on Friday when the company debuted its newest SUV model, the Wey VV5s.

"This is a more realistic option for me; it looks great both outside and inside and the price is much better," a Chengdu resident surnamed Liu told the Global Times, jumping in the driver's seat of a fresh, red Wey VV5s.


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