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The 7th China (Guangzhou) International Automobile Exhibition (hereinafter referred to as Auto Guangzhou) is held for eight days between November 23 and 30, 2009. The event is taking place in Guangzhou City, the provincial capital of Guangdong Province, and FOURIN conducted local report on the 24th which was trade visitors’ day. This time, various automakers from Japan, China, Europe, the US, and Korea exhibit over 720 vehicles and the number of attending companies is 670, becoming the largest show since its start in 2003.

Auto Guangzhou is organized by the Guangzhou municipal government and the China Association of Automobile Manufacturers, an affiliated organization of the central government. It differs from the Beijing and Shanghai Motor Shows which have gained the status as international events. As the largest local motor show in south China, it has a strong overtone of promotion of sell-out models, especially as a guide for the direction of imported vehicles there are many local vehicle dealers who exhibit in cooperation with their affiliated manufacturer. For this reason, rather than exhibiting premiere and concept vehicles, the show has an important role in foretelling user preference by exhibiting unreleased imported models.

South China where Guangzhou City is located is centered on the Pearl River Delta which is also home of Shenzhen City next to Hong Kong. This city cluster has been the leader in China’s export-oriented economic growth and its maturity as a “vehicle society” is more advanced compared to other regions of China. Many users have already replaced their vehicle twice or three times or are considering possessing several vehicles. Consequently, in addition to China’s mainstream medium sedan, this region tends to have high demand for a variety of models in terms to body style and price range. For instance, niche markers, such as MPVs, crossovers, sportscars, as well as camping vehicles, are evidently growing. Moreover, thanks to the region’s mild weather, the region has become the leading market of cabriolets in China.

In order to appease such a niche market, it requires high-mix low-volume sales. As a result, in order to promptly predict quickly changing user taste, foreign automakers select complete vehicle import over local production as a means of supply. At the current show, Mitsubishi Motors emphasizes the point of genuine imported vehicles with an aim to expand its presence in the niche segments of the Lancer Evolution and Pajero. Fuji Heavy Industries aims to grab user demand which attaches importance to accomplishment, setting the retail price of the Forrester small SUV in the 200,000 CNY range which has enabled the automaker to gain top sales position among imported SUVs. Moreover, Honda’s premium brand, Acura, hired Andy Lau, a Hong Kong movie star who boasts high popularity in south China, for promotional purposes with an aim to raise the brand’s low recognition level.

Additionally, automakers which clearly focus on safety needs of users can be identified from their exhibit. Volvo Cars, Citroën, Smart, and Ford display cutaway models to appeal their collision safety technology. Toyota exhibits a passenger car which has undergone collision testing, drawing widespread attention from visitors.

Local automaker, Guangzhou Automobile Group exhibits three concepts, a high-end sedan, a cabriolet, and an SUV, top models of the automaker’s independent GAC brand. The automaker also has an ambitious approach to make Auto Guangzhou the venue for unveiling new products. But having said that, each exhibited model is still at the concept stage, therefore, the development of the 2010 independent brand project has plenty of unclear parts.

In Guangzhou and nearby cities, Japan’s Honda, Toyota, and Nissan each has built joint venture production bases with several hundred thousand units annual production capacity in the past ten years. Japanese passenger cars also maintain top market share in the region. However, it was reported by the media that Volkswagen plans to build a compact passenger car plant in Guangdong Province and Hyundai, Kia as well as China’s BYD, Chery, and others are speeding up product release of budget compact cars. Consequently, there is high risk of diminishing share if Japanese automakers cannot prepare for the current fast-paced breakup of the market and for cutthroat competition in the future by having superior brand power and reducing cost.

For this reason, at the Japanese Auto Parts Procurement & Promotion Exhibition 2009 (JAPPE 2009) which is held simultaneously with Auto Guangzhou and hosted by the Japan External Trade Organization (JETRO), Toyota and Nissan’s local joint ventures Guangqi Toyota and Dongfeng Nissan respectively each displayed Tier 2 and 3-type parts which they wish to procure from local suppliers. Toyota has already realized the price competitiveness of Chinese made parts, sparing no time and effort on training of local suppliers.

Especially, Toyota which displayed over 100 Tier 2 and 3-type parts including stamped, cast, and laser welded parts, gum resin, and light bulbs. In addition to distributing instruction leaflets, Toyota set up a booth for taking offers from local suppliers. In complete contrast with its past cautious stand about procuring from Chinese suppliers, Toyota switched to an outgoing position.

However, once a component is replaced with a Chinese-made product, there is generally no return to a Japanese-made product, therefore the transfer of complete vehicle production to China will be followed by the relocation of Tier 2 and 3-type parts manufacturing, causing concern for the hollowing out of the industry in Japan.

Below, there is our photo report on Auto Guangzhou and JAPPE 2009.

November 24, 2009

Japanese Automakers

European Automakers

European luxury models and super cars

American Automakers

Korean Automakers

Chinese Automakers