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.