- The Washington Times - Monday, April 20, 2009

SHANGHAI (AP) - The Shanghai Auto Show, once a venue for the West to show off its cars to a country still relying on bicycles, is now a showcase for China’s own industry as it overtakes the U.S. in market size.

From electric vehicles to the biggest gas-guzzling SUVs, China’s automakers are maneuvering to upstage their global rivals in the only major market that is showing resilience during the global financial crisis.

“I have only three words: excited, excited, excited!” Zhang Xiaoyu, chairman of the Association of China Auto Engineering, said as the biennial Shanghai show opened Monday.

“After only 18 years of development, we may become the world’s leading auto market,” he said.

There was little sense of the gloom prevailing elsewhere in the industry _ and Chinese-made cars seemed to draw the biggest crowds.

Sales in China hit a monthly record 1.1 million in March, exceeding U.S. sales for the third month in a row as tax cuts and other government incentives drew customers back into showrooms after a brief slump late last year.

For companies including General Motors Corp., China seems the closest thing to a sure thing.

GM executives said the company intends to keep growing in China regardless of how its financial mess is resolved, though new CEO Fritz Henderson canceled plans to attend the Shanghai show to focus on the crisis back home.

“We will continue to invest in new products for China, in new facilities and the latest in technology,” said Nick Reilly, president of GM’s Asia-Pacific division.

Detroit-based GM is scaling back even in other parts of Asia, but it aims to double sales in China to about 2 million units a year within the next five years, whether it ends up in bankruptcy protection or not, said Kevin Wale, president and managing director of the GM China Group.

Both domestic and foreign manufacturers have been expanding their product offerings to span the spectrum from lower-end compacts to the raciest, plushest luxury models, the prerequisites for success in China’s increasingly diverse, hyper-competitive market.

But the real crowd-drawers Monday seemed to be the Chinese automakers.

They may remain reliant on mostly foreign technology and design and are still nowhere close to meeting finicky U.S., European and Japanese standards, but they are catching up, analysts say.

The last time the Shanghai show was held, Geely Automobile Holdings was limping along with a fleet of outdated models.

On Monday, Geely reintroduced itself as the “New Geely” with several new brand names and six new car models, including one it called a “large business limousine.”

“They made some very hard decisions, to scrap their old vehicles and shift to some new ones,” said Yale Zhang, a Shanghai-based analyst with CSM Worldwide. “After two years of hard work they are in much better shape.”

“We had a lot of difficulties. Now we are trying to overcome them,” said Geely’s chairman, Li Shufu.

Chery Automobile Co., another homegrown manufacturer, introduced its Riich and Rely new premium models, aiming to move upmarket after building its business mainly on smaller sedans such as the popular QQ minicar.

“Chery is ready to meet the challenge of the global market. We’ve succeeded in launching four brands of new cars this year,” declared Chery’s president, Yin Tongyao.

The new darling of the domestic crowd is battery-maker BYD Auto, whose electric vehicle technology has attracted investment from Warren Buffett’s company, Berkshire Hathaway Inc. BYD’s F3 compact was China’s 10th biggest selling car last year.

“BYD, Geely and Chery are all doing very well, but BYD looks better. They are doing best among the local brands,” said Zhang of CSM Worldwide.

BYD introduced only one new model on Monday, the M6 multipurpose vehicle, but it had plenty of its latest electric and gas-fueled cars on show, including its plug-in hybrid F3DM, which was launched for fleet sales in December.

The company is getting many inquiries from foreign companies looking to cooperate with its electric vehicle technology, said Paul Lin, a company spokesman.

The company is sticking by its plan of selling an electric vehicle in the U.S. by 2011, Lin said.

___

Associated Press researcher Ji Chen contributed to this report.

(This version CORRECTS that funding for BYD Auto came from Warren Buffett’s company, not Buffett, corrects spelling of Buffett’s last name. )

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