German Carmakers Optimistic About China

In spite of a dramatic decline in sales and the loss of market share, German car manufacturers are still looking with optimistic eyes at the burgeoning Chinese auto market.

The Auto Shanghai 2005 car show opens its doors on Friday and German carmakers will be out in force and showing no signs that China has lost any of its allure. In fact, the day before the show was due to begin, some of them were speculating about double-digit growth figures and a resurgent luxury car segment in the world's third-largest vehicle market.

There was no indication that the battering German cars have taken recently in the Chinese market had put any of the manufacturers off displaying their extravagent wares at Auto Shanghai 2005. As if to signal Germany's intent, Mercedes-Benz announced that it would present four new models at this year's show and added that it would begin local production of C- and E-Class models in China in the second half of 2005.

A show of R-, B-, M- and CLK-Class

In an ostentatious show of resolve, Mercedes will roll out the star of its show, the Grand Sports Tourer R-Class, in Shanghai, along with the new Compact Sports Tourer B-Class, the updated CLK-Class and the new M-Class sport utility vehicle. All in all, it's not a line-up one would associate with an auto-market shrinking violet.

"Already today, Mercedes-Benz offers 14 model lines in China," Thomas Weber, a member of parent company DaimlerChrysler's board of directors, told a press conference in Shanghai."Our product range is the broadest in the premium and luxury segments. With the start of local production in a new plant in Beijing, we will further strengthen our long-term commitment in this important market."

BMW hopes for resurgent luxury car sector

Not to be left out, BMW is looking to Shanghai to confirm the resurgence of the luxury car market and turn around the nine percent drop in sales the company reported in the first quarter of 2005.

BMW will use the motor show to present the new 3 Series model, which was developed in Munich but built for the Chinese market in its factory in the Shenyang province, where the new 5 Series is also under construction.

BMW chief Helmut Panke is confident that the sales climate in the future will be such that the factory will eventually turn out 100,000 models for the Chinese market. Optimism is certainly not lacking at BMW, seeing as the company only sold 6,000 cars in China in the first quarter.

"China rates in the top 10 of BMW's markets, and with this expected growth we will certainly reach a situation where China gets into the top five," Panke told reporters.

VW records first market drop below 20 percent

While the luxury car manufacturers are putting on a brave face at Auto Shanghai with their shiny new attempts at seducing the Chinese market, Volkswagen injected a sense of desperate realism to proceedings by announcing that, for the first time, its market share in the country fell below 20 percent at the end of the first quarter, as competition from Hyundai, General Motors and other companies increased.

"The market has got a lot tougher,'' said Bernd Leissner, head of Volkswagen's operations in China at the Auto Shanghai 2005 show on Thursday. "We will fight to make sure we don't have a loss this year in China.'' The Wolfsburg-based company, the largest foreign carmaker in China, has seen its market share drop from as much as two-thirds since it started making cars in the People's Republic in 1985.

Volkswagen chief Bernd Pischetsrieder previously said he planned to sell 600,000 to 650,000 cars in China this year to keep about 20 percent of the Chinese market. The company plans to introduce the Touran minivan and the Caddy to China in 2005 to spur sales, as demand for its Santana sedans wanes.