China auto show opens amid environmental, growth concerns

BEIJING - Leading automakers gathered in Beijing Sunday for China's biggest car show, expressing confidence in the world's largest car market although lacklustre growth and environmental restrictions have thrown uncertainty into the mix.

More than 1,100 vehicles are on show at the Beijing International Automotive Exhibition in the capital's suburbs, which opens to the public on Monday.

Journalists and spectators crowded around the displays while female models drew the attention of photographers.

General Motors, Toyota, Volkswagen and Hyundai are among the global manufacturers on the list of attendees, along with SAIC and Dongfeng, China's number one and two domestic automakers.

At Ford Motor's display President and CEO Alan Mulally rode onto the stage in a bright red Ford Mustang, the model being the latest incarnation of the iconic brand celebrating its 50th year.

"How cool is that," he said after getting out, his red tie matching the paint job.

The expo comes as a growing number of Chinese cities are restricting the number of cars on the road, in a bid to battle pollution and congestion - moves that analysts warn could cut into purchases.

The eastern city of Hangzhou, a popular tourist destination, last month became the sixth major city to implement such a restriction, with some estimates placing the limit at 80,000 car plates a year.

China's car sales surged 13.9 per cent to 21.98 million vehicles last year. But that growth hit a speed bump in March, slowing to a 6.6 per cent year-on-year rise after reaching a record 17.8 per cent high in January.

China's economy has also turned in its weakest performance in 18 months, growing 7.4 per cent in the first quarter of 2014.

Beijing has indicated a willingness to accept weaker growth as it tries to move the economy away from investment and toward domestic consumption.

'Fantastic' market

Despite the concerns, industry players and analysts say the China market's importance to global manufacturers cannot be overstated.

"I think the market for cars is going to continue to be fantastic," Mulally told reporters on Sunday, adding that the promise of increased domestic spending outweighed concerns about congestion.

China's overall plan "to move to a consumer-based economy" was a key factor "that reduces risk", he said.

"We are also working with all of the cities and the government because just to add more cars in the cities is not going to be the answer," he added.

Ford has opened three plants in China since 2012, with four more under construction, Mulally said, adding: "This is part of our biggest global manufacturing expansion in 50 years".

Karsten Engel, president and CEO of BMW's operations in China, said Sunday the German automaker was introducing 10 new models to China this year, and carrying out more manufacturing and research and development inside the country.

"All these efforts are based on our confidence in the long-term development of our success here," he said.

Further underscoring China's significance in the car market, French auto giant Peugeot Citroen's agreed earlier this year to hand over part control to Dongfeng and the French state.

German auto giant Daimler said last month it had signed a deal worth one billion euros ($1.4 billion) with Chinese partner Beijing Automotive Industry Corporation to expand production at their joint venture based in Beijing.

South Korea's largest automaker Hyundai Motor also announced in March it was planning a fourth plant in the country.