Share this article

print logo

Automakers competing in a crowded China market; Sheer numbers create a hotbed for sales

Juan Lu and her husband, Jun Gao, can't suppress their new-car grins.

The young Chinese couple have taken delivery of their first car, a Ford Mondeo midsize sedan, from a Ford dealership in western Beijing.

They are part of a burgeoning middle class that wants to trade in their subway tokens for their own wheels to get Lu to work at the hospital and Gao to his government job, and also take them away for a weekend holiday.

Automakers like Ford and Fiat-Chrysler are racing to establish themselves in China to meet this growing demand, while dominant players such as General Motors, Volkswagen and Hyundai invest to maintain their leadership.

While growth has slowed in the world's largest market, the sheer volume and sales potential mean no one can afford not to compete in China.

There has always been wealth in China. With a population of 1.3 billion, there are more than a million millionaires, and the number keeps growing, making it a target-rich environment for large luxury vehicles with hired drivers and sumptuous back seats.

China is a country where driving is not for the faint of heart, especially in major cities, but that has not curbed consumer appetite for vehicles.

The congestion -- it can take hours to travel a short distance in Beijing -- has bred precision driving skills on roads where pedestrians, bikes, scooters and odd three-wheeled minicars give way to larger luxury cars and alpha buses that blare their horns incessantly to warn everyone to move aside.

The overarching rule: First is right, meaning the vehicle closest to a gap in traffic goes for it. Lane markings and red lights are mere suggestions. Against all logic, left turns are executed from the far right lane in an asphalt dance where the spaces between vehicles and their surroundings are measured in inches. Near-misses are constant; actual accidents, surprisingly rare.

Into this mix now wade an excited Lu and Gao, both 30, who live frugally and have saved for their first car for as long as they can remember.

They bought a Mondeo because it cost less than the Volkswagens, Hondas or Buicks they researched online.

"Our friends bought a Mondeo and recommended it," Lu said. "We picked Ford because the Mondeo price is affordable, and the car is very big, safe, spacious and good for family use."

Word of mouth and Internet comparisons are as important in China as in any mature market.

They paid about $23,834. Credit is available in China, but less than 20 percent trust or use it. Lu and Gao got financial assistance from their parents instead.

The couple won the lottery in February -- the one that gave them a license plate.

Megacities like Beijing and Shanghai with populations of about 20 million and 23 million, respectively, are addressing traffic gridlock and smog by restricting license plates.

Beijing issues 20,000 new plates a month. Would-be car buyers stand a 1-in-32 chance of securing a plate that allows city driving six days a week. The last number on the plate determines the days the car can enter the city. Driving on the unauthorized day can be punished by a fine or even imprisonment. In Shanghai, 8,000 plates are auctioned monthly and sell for an average price of $7,200.