China-Europe Auto Symposium

An impressive list of organizations, including BASF, the Financial Times, Wirtschafts Woche (Germany’s Business Week), Russell Reynolds Associates, and China Automotive Review sponsored the “China-Europe Auto Symposium” in Shanghai this past Tuesday and Wednesday. The subject of the Symposium was “Successful Market Entry into Europe,” and the agenda was designed to discuss the legal, engineering, management, marketing and branding issues of entering the European car market. Representatives from many of China’s leading car assemblers and component makers were in attendance.

The Symposium is yet one more indication of how much the center of gravity in the global auto industry is shifting to China. Despite the global economic downturn, China’s car market is booming to the point where it has now surpassed that of the United States. Chinese companies have been actively bidding for overseas auto assets, and as demonstrated by the Symposium, they are now learning what it takes to build their brands overseas.

As someone who entered a new market (in my case China) and created a leading industry player, I was asked by the sponsors to deliver a keynote address at the opening dinner, sharing the lessons I learned in doing so. I’m in the process of writing up my remarks and will include them in my next post.

However, I did want to share with MTD readers some of the comments made by the senior leaders of China’s auto industry at the Symposium. I found them quite surprising.

China’s automotive industry goals in 2008 were summarized by the numbers “10” and “1.” Industry officials hoped to produce and sell a total of 10 million vehicles during the year and to export 1 million units. Throughout most of 2008, the industry was on course to achieve those goals. The sharp slowdown in China’s economy in the fourth quarter, though, caused China to fall just short of the overall sales goal, and China’s auto industry closed the year at 9.7 million vehicles. A falloff in vehicle exports, particularly to Eastern European countries, caused vehicle exports to finish at 600,000.

Coming into 2009, expectations were that total industry sales might reach 11 million vehicles as market demand was stimulated by various government actions. In addition to reforming gasoline pricing and eliminating many auto usage taxes at the start of the year, the government reduced consumption taxes on smaller cars and provided various subsidies for the purchase of fuel efficient vehicles as part of its stimulus program. As a result, sales of light trucks and smaller displacement vehicles have soared all year.

Nonetheless, I was somewhat surprised to hear a senior auto executive announce at the Symposium that total vehicle sales may reach as high as 12 million vehicles in 2009, and to express his confidence that total sales would increase by at least one million vehicles each year over the foreseeable future. If those numbers are correct, China’s position as the largest auto market in the world will be secure for a long time to come.

An event to celebrate the production of the 10 millionth vehicle in China in 2009 will be held at First Auto Works in Changchun.

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