Is Beijing the New Motor City?

Volkswagon released sales numbers for 2011 and became the worlds 2nd largest automaker, beating Toyota out by selling a quarter million cars more cars. What’s more interesting is that the bulk of their sales increase didn’t come from the Americas or the UK. No, to find that answer, we have to travel to far east. In total, the Asia/Pacific regions accounts for 31% of VW’s sales (2.56 million cars). VW also had a good year in North America with 666,800 units sold, but it’s clear that the Chinese have more of an appetite for cars at the moment than Americans. This begs the question, how will cars change when Beijing becomes the new Motor City?

China has become the hot and coming market for cars these last few years. As the middle class expands, more and more people acquire the disposable income to buy cars. Foreign automakers are keen to grab a slice of the pie, but in order to produce their cars in China, the state requires them to partner up with a Chinese automaker. The idea behind this is to allow Chinese automakers to catch up in design and engineering, but often times, it results in Chinese automakers plagiarizing it’s foreign competitors. Foreign automakers can’t do much other than grumble about these knockoffs because the Chinese market is simple too large to ignore.

General Motors also had a great year in China, with 2.55 million units sold. With numbers like those, one wonders why the US bailed out GM at all. At the 2012 Detroit Auto Show, many were puzzled why GM chose to introduce the compact crossover Buick Encore, but when framed against Chinese consumer habits, the Encore makes a lot of sense. It’s small and easy to park (driving in large Chinese cities is a nightmare), and it’s quiet and comfortable (the Chinese love luxury and status).

If this is a continuing trend, we could soon see other automakers creating models that fit Chinese consumer habits. But then again, it’s only a matter of time before Chinese automakers catch up in engineering and eat all the other automakers lunches.

source: Car Advice