Giant automakers reaffirm confidence in China market

Giant automakers reaffirm confidence in China market sales forecasts

Agence France-Presse, Beijing

The giants of the car world Wednesday reaffirmed their confidence in the Chinese auto market, forecasting strong sales and brushing off concerns that supply will soon start to outpace demand.

U.S.-German group DaimlerChrysler led the charge, announcing one billion euros in investment to China over the next few years.

Sales for all DaimlerChrysler brands were forecast to reach 60,000 units in 2004, up 75 percent from 2003, said Roman Fischer, chairman and chief executive officer of DaimlerChrysler China Ltd.

FAW Toyota Motor Corp meanwhile said it was struggling to keep pace with booming demand,and has set a sales target of 128,000 vehicles this year.

Executives at the joint venture between Toyota Motor Co Ltd and First Automotive Works, each ranked number one in their respective home markets, said this compares with 98,000 sold last year.

Wang Fachang, deputy president of FAW Toyota Motor Sales Co Ltd, said he was very confident about the outlook for the Chinese auto sector despite concern in some quarters about overcapacity.

"Currently, our entire output capacity is still unable to meet demand," he said at China's flagship motor show, AutoChina, which has attracted virtually all the world's leading car producers.

To keep up with demand, FAW Toyota would expand capacity at one of its Tianjin plants to 100,000 units by the end of this year, compared with an originally planned capacity of 30,000 units, Wang said.

A second manufacturing plant will also be built in Tianjin to make the Crown luxury sedan and a number of mid-range vehicles, ultimately having capacity of 150,000 units annually.

While Citroen, a unit of PSA Peugeot-Citroen of France, expects its car sales in China to slow this year, they will still grow 20 percent to 124,000 units and company officials were bouyant.

"I don't see there is anything to be pessimistic about ... this is still fantastic for any market," said Claude Satinet, Citroen general manager.

Last year, Citroen sold 104,000 vehicles after 2002 sales rose 60 percent to 84,000.

Satinet's sales forecast, however, would appear to echo General Motors' comment this week that car sales have been affected as the Chinese government takes measures to tighten credit and so cool its overheating economy.

Auto sales in China are expected to drop 20 percent in May from April on the back of the impact of the government's credit tightening policy and poor market sentiment, according to a research report by Merrill Lynch.

When asked about fierce price competition in China, Satinet said Citroen has a high degree of local content which will help it cope.

"If prices fall, we will also follow suit but not by more than the decrease in the market," he said.

Joachim Schmidt, head of marketing sales for the Mercedes car group, said he sees the potential for sales of 50,000 Mercedes passenger cars in the medium- to long-term in China, compared with 9,000 units in 2003.

"Ten percent of global sales are in Asia-Pacific at the moment but that will increase to 13 percent in the next two years, powered by growth in China," he said.

"We are very confident about hitting sales targets in China."

Among other automakers attending China's biggest car show, Nissan Motor Co said it expects China to represent 10 percent of its global vehicle sales by the end of the decade, up from about six percent now.

The Japanese company is maintaining its sales target of 90,000 cars in China this year, up from 65,000 sold last year.

"We'll have three big markets -- the U.S. and Japan -- but China will be a very strong third," Jean-Jacques Le Goff, senior vice-president of Nissan Motor told reporters.