Automakers expect strong China sales

BEIJING (AP) -- Global automakers issued ambitious forecasts Sunday of up to 65 percent sales growth in China's booming market this year -- a striking contrast to the gloom in the United States and elsewhere.

Sales of some individual models to newly prosperous Chinese drivers soared by up to 100 percent in the first quarter over the same period of 2007, said executives speaking at the Beijing auto show.Toyota Motor Corp. expects to sell 700,000 vehicles in China this year, up 40 percent from 2007, said executive Yuzo Ushiyama.

"As the 40 percent (target) is much bigger than the overall market growth, this is challenging," Ushiyama told reporters. "But we want to try (700,000 vehicles) as our goal."

Automakers are looking to China to drive sagging sales at a time when demand in the United States is expected to decline this year while Europe and Japan are flat.

Sales in China, already the world's No. 2 vehicle market after the United States, are forecast to grow 15 to 20 percent this year, driven by a boom that saw the economy grow by 10.6 percent in the first quarter.

Last year, Chinese drivers bought 5.5 million cars, minivans and SUVs and 3 million commercial vehicles, up from just 1.6 million vehicles sold in 1997. J.D. Power and Associates says sales should grow by 1 million vehicles annually through 2015.

"I think every year for some time in the future the same thing is going to happen," said Philip Murtaugh, Chrysler LLC's chief executive for Asia.

The number of Chinese families that can afford a car is expected to mushroom to 75 million in 2015 from 10 million in 2005, according to Jim Raymond, a General Motors executive.

The rivalry for a share of China's market has turned the Beijing auto show into a major industry event that this year drew more than 100 Chinese and foreign automakers. On Sunday, as companies held presentations for reporters, they competed for attention with live bands, acrobats and dancers. The show opens to the public on Thursday.

On Sunday, Daimler CEO Dieter Zetsche was joined on stage by Chinese film star Zhang Ziyi as he showed off the new Mercedes-Benz SUV, the GLK, which goes on sale in China next year.

Major U.S., Japanese and European competitors are growing faster than the market as a whole, building market share at the expense of China's dozens of tiny automakers.

Volkswagen AG's sales in China grew 32 percent in the first quarter, executives said. They gave no full-year projection but said they hope to top 1 million vehicles in 2008, which would be a 10 percent increase over 2007's 910,491 cars.

"In no other country does this brand sell as many cars as in China," said VW chairman Martin Winterkorn.

Hyundai Motor Co.'s Chinese joint venture expects to see sales rise 65 percent this year to 380,000 cars, executive vice president Li Honglu told Dow Jones Newswires.

France's PSA Peugeot-Citroen expects to sell 150,000 cars in China this year, a 30 percent increase over 2007's 115,000 vehicles, according to Jean-Louis Chamla, vice president of international sales and marketing.

Daimler AG said Mercedes-Benz sales in China rose 42 percent in the first quarter. That included a 110 percent jump in sales of the R-class minivan.

Zetsche declined to give a 2008 forecast but said Mercedes will add 20 new dealerships in China this year, bringing the total to 120.

Still, automakers said they face intense competition and pressure to cut prices in China, where dozens of small Chinese producers measure their share of the fragmented market in fractions of a percentage point.

"I think this is just the most competitive market in the world," said Carlos Tavares, executive vice president of Nissan.

Also Sunday, Murtaugh said Chrysler and China's Chery Automobile Co. are still working on a Chinese-made car meant for sale in the United States and think it has yet to meet safety standards.

"Safety is a huge challenge because of the size of the car," Murtaugh said. "I don't think we're too far away, but neither one of us are ready to say 'Let's go' yet."


AP Business Writer Elaine Kurtenbach contributed to this report.

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