Detroit’s Big Showing at Beijing’s Auto Show

Even Chrysler is making moves to get a piece of China's market

   

A decade ago, nobody really paid much attention to the notion of an automobile trade show taking place in China, but oh have times changed. Last Friday marked the start of the Beijing International Automotive Exhibition, and nearly every major automaker is displaying its latest models at the event in an effort to capture a share of the world’s largest auto market. A total of 990 models will be on display at the show, with 89 of them making their global debut.

U.S. auto giants Ford (NYSE:F) and General Motors (NYSE:GM) will have a big presence at the show, as will Volkswagen (PINK:VLKAY). The German company’s Audi brand is the most popular luxury auto in China, and Volkswagen aims to keep it that way. Mercedes (PINK:DDAIF) doesn’t plan on letting Audi stay on top, however, as the company also will have a big presence in Beijing. BMW also plans a strong showing at the trade show, especially with its ultra-luxury Rolls-Royce division models.

Of course, when it comes to China, it takes more than just a sparkling presence at the auto show to capture market share. GM has long known this, so instead of just leasing floor space at the trade show, it has announced plans to add 600 dealerships in China this year. That’s about a 20% increase over the current number. The additional dealerships would bring the company’s dealer network in China to 3,500, up from 2,900 at the end of 2011. To give you a sense of size, consider that GM’s U.S. network totals 4,400 dealerships. GM also plans to build additional factories in China, and it’s looking to expand its Cadillac luxury brand in the country.

GM is the No. 1 foreign automaker when it comes to China sales, followed by Volkswagen. This fact doesn’t sit well with Ford, and the company has decided to do something about it. The Detroit icon recently announced plans to build its fifth auto plant in Eastern China as part of a doubling of production capacity and sales outlets in the country by 2015. When the expansion is complete, Ford will says it will be capable of building 1.2 million passenger cars a year in China — nearly half the number it built last year in North America.

The other member of the so-called Detroit 3 U.S. automakers, Fiat‘s (PINK:FIATY) Chrysler Group, has really been behind the Chinese wave, but that’s something it’s trying to correct. In fact, the Chrysler brand is using this year’s Beijing auto show as something of a coming-out party for its return to the world’s largest auto market.

The irony here is that Chrysler’s Jeep actually was the first Western brand to go on sale in the People’s Republic back in 1985. Unfortunately, Jeep pulled its production out of China in 2006, right when other automakers were beginning to realize the potential enormity of the market.

That mistake is being rectified by Fiat-Chrysler CEO Sergio Marchionne, who’s eager to get back into the fight for Chinese market share. In fact, the company has already commissioned a Chinese designer to create a new version of the popular Chrysler 300 model, which will be specifically made for the Chinese auto buyer. A prototype of the new model, called the Ruyi, is on dispay now at the Beijing auto show.

In Chinese, ruyi means “as one wishes.” For Fiat-Chrysler, as well as for nearly every automaker out there, the real wish is to hit it big in China — and that’s precisely what the major automakers are attempting to do.

As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2012/04/detroits-big-showing-at-beijings-auto-show/.

©2014 InvestorPlace Media, LLC

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