Japanese brands seek to claw back lost China sales at Guangzhou auto exhibition

Guangzhou's automobile market has had a tough time of late.

The combination of a city limit on the number of new cars allowed on its roads, and rising anti-Japanese sentiment, has meant falling sales in recent months.

But despite the downturn, organizers of the Guangzhou Auto Show 2012, said they expect the event to be the biggest in its 10-year history, with carmakers from around the world, including Japan, arriving in larger numbers.

A Dongfeng Nissan car at the Guangzhou Auto Show 2012. More than 950 vehicle models are on display at the 10-day exhibition, which opened on Thursday. [Photo/China Daily]

Open for 10 days from Thursday, 950 vehicle models will be displayed, 50 more than the event in 2011.

A record 34 global debuts of vehicles will be made, with 23 of these from Asia.

Almost all of Japan's major car manufacturers have production bases in Guangzhou, giving its brands an important role in the South China market.

But business has been hit hard by falling orders and production cutbacks, due to tension resulting from Japan's illegal "purchase" of China's Diaoyu Islands.

The latest vehicle production forecasts for China from automotive strategy, planning and analysis company IHS Automobile, show just how severe the impact of the Diaoyu Islands dispute has been on Japanese vehicle production in China. Namrita Chow, a senior analyst with IHS in Shanghai, said that despite dealers offering strong discounts, overall sales of Japanese brands in China slumped 40 percent in October year-on-year.

"In 2013, we see Japanese automakers further cutting production with lost output likely to hit 350,000 units in 2013 and 300,000 units in 2014," Chow said, adding however, that the recent "sales dive does not mean that they have completely stopped selling models".

She said that Nissan and Toyota, in particular, which have the biggest stands at this year's event are using the occasion to show they are still major players locally, taking more floor space than ever before.

Toyota said it will exhibit more models than usual on a 4,500 square meter stand, 10 percent larger than last year, including its new flagship Lexus sedan.

Japanese rivals Honda and Mitsubishi will also be there in force, with the former choosing to focus on its luxury Acura brand, and the latter bringing its latest models.

Given the recent issues, Chow said their involvement at this year's show is all about "strengthening brand awareness of their products in the hope that they regain some of their market share".

According to IHS, South Korea's Hyundai will be using the Guangzhou event to strengthen its presence in southern China, with displays of all its most recent vehicles.

IHS estimates that Hyundai is likely to see sales of 967,000 vehicles in 2013 in China, rising from 786,688 in 2011 - significantly boosted at the expense of lost Japanese sales.

French brand Peugeot Citroen, added IHS, is using the show to launch its new, locally produced sport utility vehicle, the Peugeot 3008, through local joint venture Dongfeng Peugeot Citroen Automobile.

The SUV focus is timely. This week a new forecast from McKinsey & Co suggested that in the next decade, car sales in China are expected to rise by 8 percent annually for the next decade, likely to be driven by SUV sales, especially in second- and third-tier cities.

"Peugeot Citroen aims to win market share from Japanese brands in the SUV segment with the release of this new model," said Chow.

"Peugeot-branded models in China will see sales increase to more than 240,000 units in 2013, up from around 174,210 in 2011."

German luxury brand Mercedes-Benz, meanwhile, is unveiling a line up of 36 models, including the zero-emission F 125 Research Vehicle, the all-new G63 AMG high-performance SUV, and an all-new SL roadster.

Bjorn Hauber, executive vice-president of Mercedes-Benz (China) Ltd, called its product offering in Guangzhou "even stronger" this year, aimed at "further consolidating our core competitiveness in the market".

lifangfang@chinadaily.com.cn