SUPPLEMENT TO May 2005 © 2005 Crain Communications. All rights reserved. GuideGuide toto China’sChina’s AutoAuto MarketMarket • Global automakers’ joint ventures • Domestic Chinese automakers • Vehicle production and sales data • Global OE suppliers in China 2005 Guide to China’s Auto Market May 9, 2005 Go to www.autonews.com/chinaguide to download this guide in pdf format. Even the most blinkered optimist understood that China's Industry analyst and consultant Graeme Maxton estimates sizzling new-car market had to cool off sometime, but few that margins on vehicles sold in China have plunged to an observers expected it to be quenched so rapidly, or thoroughly. average of about 3 percent or 4 percent from a high of as After soaring 62 percent in 2002 and 76 percent in 2003, much as 25 percent just three years ago. That is hurting passenger-car sales last year rose only 15 percent over 2003 to everyone. about 2.3 million units. In January, GM forecast that net profit from its Asia Pacific China's central bank triggered the slowdown in May when it operations, where China has accounted for the bulk of profits, clamped down on credit in a bid to cool the nation's would fall to $600 million this year from $729 million in 2004. overheating economy. This year is off to an even colder start. Car sales for the first That may be optimistic. GM said its profit from China in the two months, the most recent available at press time, fell fourth quarter slid 68 percent from a year earlier to $33 million. 16 percent from a year earlier to 286,100 while output was That represented just 5.2 percent of the automaker's worldwide down 8 percent to 301,200, the China Association of net of $630 million, vs. 20 percent in the third quarter. Automobile Manufacturers reports. Jean-Martin Folz, CEO of PSA Peugeot-Citroen, disclosed Most analysts and industry executives now expect the market recently that the French automaker will lose money in China this year to be up no more than 10 to 12 percent over 2004. this year for the second year in a row because of the cutthroat Still a small pie pricing environment. While 10 percent growth in most markets today would be China produced Peugeot's highest profit margin of any cause for jubilation, it's not robust enough to support the market as recently as 2003, he said. But the carmaker lost 38 industry's ambitions in China, where automakers have spent million euros, or about $50 million at current rates, at its some $15 billion to date to build new plants and dealer venture with Dongfeng Motor last year vs. a 32 million euro networks. pretax profit in 2003. For one thing, China's growth rates come on a small base – a Officials hold firm 10 percent rise in the market this year, for example, would yield There seems to be little hope for immediate relief. Chinese only about 230,000 more unit sales. For another, nearly 50 domestic and foreign automakers are officials in March reiterated their commitment to reining in competing for a piece of what, essentially, still is a small consumer spending through tight credit policies. market. Not surprisingly, the competition has turned into a Analysts say the sudden cooling of the hot auto industry has knife fight. exposed China's age-old business risk: A period of explosive Faced with the unaccustomed problems of weakening growth may prove alluring, but not necessarily serve as an demand and excess inventory, automakers are slashing prices accurate gauge of the market's true size. across the board in a bid to keep showrooms open. Even Few would dispute, though, that China will become a huge BMW, a marque considered to have the auto industry's most auto market over the long term. But for the foreseeable future, unassailable price premium, cut prices by up to $12,100 early the industry's new operating paradigm in China will be this year after its sales in China tanked 16 percent in 2004. overcapacity, softening demand, price resistance and weaker In recent weeks, Ford, Honda and Audi have announced profits. price reductions. Honda slashed the price of its best-selling Those also are the building blocks of a shakeout. Accord by $2,425 to about $24,000 while Ford cut its compet- "The price war between automakers last year cut the overall ing Mondeo to $23,390 from $26,660. profit margin of the industry," says Jiang Yuan, a Bureau of According to the National Bureau of Statistics in Beijing, car prices in China fell about 10 percent industrywide last year, and Statistics official. "The price wars will continue until those will slump another 15 percent this year. That has taken a toll on brands that are less competitive are driven out." companies' bottom lines. James R. Crate, co-editor, Guide to China’s Auto Market Contents China passenger vehicle Map of production production and sales...................4 facilities in China .....................17 Global automakers/ Domestic automakers ..................19 joint ventures............................7 Global suppliers in China..............25 How to reach us: Publisher and Editor-in-Chief www.autonews.com Guide to China’s Auto Market staff Keith E. Crain Editorial staff Co-Editors Associate Publisher and Editorial Director [email protected] Anne Wright Curtis James R. Crate Peter Brown Phone: 313-446-0361 Fax: 313-446-0383 [email protected] [email protected] Editor, Automotive News Circulation David Sedgwick [email protected] Contributing researcher Geoff Liu Phone: 888-446-1422 Fax: 313-446-6777 [email protected] Crain Communications Inc. Advertising Assistant Managing Editor Mary Beth Vander Schaaf Keith E. Crain Rance Crain Larry Schlagheck •Graphics Editor Susan Zavela Bamford •Asia Editor Chairman President [email protected] M.K. Crain M.P. Crain James B. Treece •China correspondent Alysha Webb Treasurer Secretary Phone: 313-446-6790 Fax: 313-446-8030 • Deb Domby, Dorota Kowalski • Researchers Web Editor Robert C. Adams WIlliam A. Morrow Subscriptions Victor Galvan •Advertising and Sales Director Tony Merpi Group Vice President/ Executive Vice To start or renew a subscription e-mail •Director of Business Development Nick White Technology, Manufacturing, President, Operations Circulation [email protected] or call 888-446-1422 •Conference Director Libby Irwin •Global E-Business (in the U.S. or Canada) or 313-446-1662 Director Andrew Smith •Director of Business Planning G.D. Crain Jr. Mrs. G.D. Crain Jr. Founder (1885-1973) Chairman (1911-1996) (in all other locations) John Fitzgerald •Circulation Manager Michelle VanArman Cover photo: Shoppers crowd around a Chevrolet Spark at an automobile market in Beijing. Photographer: Natalie Behring-Chisholm/Bloomberg News. Data in this publication was provided by Automotive Resources Asia. Ltd., Suite 619, Chang An Building, 7 Jianguomennei Ave., Beijing 100005 P.R. China. www.auto-resources-asia.com. E-mail [email protected]. (86) 10-6510-1686. 2005 Guide to China’s Auto Market Automotive News • Automotive News Europe • Automotive Resources Asia 3 2005 Guide to China’s Auto Market May 2, 2005 Go to www.autonews.com/chinaguide to download this guide in pdf format. China's sizzling new-car market had to cool off sometime, In January, GM forecast that net profit from its Asia Pacific but few observers expected it to be quenched so rapidly, or operations, where China has accounted for the bulk of profits, thoroughly. After soaring 62 percent in 2002 and 76 percent would fall to $600 million this year from $729 million in 2004. in 2003, passenger-car sales last year rose only 15 percent Profit in the fourth quarter of 2004 slid 68 percent to $33 over 2003 to about 2.3 million units. million. This year is off to an even colder start. Car sales for the first Jean-Martin Folz, CEO of PSA Peugeot-Citroen, disclosed two months, the most recent available at press time, fell recently that the French automaker will lose money in China 16 percent from a year earlier to 286,100 while output was this year for the second year in a row because of the cutthroat down 8 percent to 301,200, the China Association of Automobile Manufacturers reports. pricing environment. Most analysts and industry executives now expect the China produced PSA's highest profit margin of any market market this year to be up no more than 10 to 12 percent over as recently as 2003, he said. But the carmaker lost €38 2004. million at its venture with Dongfeng Motor last year vs. a €32 Still a small pie million pretax profit in 2003. While 10 percent growth in most markets today would be Officials hold firm cause for jubilation, it's not robust enough to support the There seems to be little hope for immediate relief. Chinese industry's ambitions in China, where automakers have spent officials in March repeated their commitment to reining in some $15 billion to date to build new plants and dealer consumer spending through tight credit policies. networks. Analysts say the sudden cooling of the hot auto industry For one thing, China's growth rates come on a small has exposed China's age-old business risk: A period of base – a 10 percent rise in the market this year, for example, explosive growth may prove alluring, but not necessarily would yield only about 230,000 more unit sales. serve as an accurate gauge of the market's true size. For another, nearly 50 domestic and foreign automakers are competing for a piece of what, essentially, still is a small "The usual mistake is to extrapolate the initial trend of high market.