If in 2014 Beijing brought me back to what Auto Shows should have remained: enthusiastic, exciting and plain and simply fun, Auto Shanghai 2015 is more about business, fending off the competition and graduating to the world stage. Has the Chinese auto industry lost its spontaneity? Perhaps it is because no scantily-clad models were allowed next to the cars this year? It certainly did give Auto Shanghai a more grey-looking, suit-and-tie, professional vibe. But not only.
Allen Huang is Commercial Manager for ChangAn, he graduated less than a year ago from Chongqing where the manufacturer is based. Speaking an almost perfect English and eager to engage in a friendly yet professional manner with the only representant of any foreign media to have ventured onto his stand (me), his face still bears the weight of what I can imagine would be numerous pre-Show briefings explaining that this is his chance to shine or he’ll have to wait two more years. After hearing my positive feedback on the ChangAn CS75 SUV’s interior, he looked into a far, scary horizon saying “competition is very tough”… Don’t get disheartened Allen. Auto Shanghai is by far the most impressive display of potential I have seen from Chinese manufacturers.
3 trends were clearly at play at Auto Shanghai 2015:
The first one is consumer-driven: China’s new and seemingly insatiable hunger for SUVs, a trend that Chinese carmakers have captured better than anyone else, seeing their SUV sales more than doubled year-on-year over the First Quarter of 2015.
The second one is purely governmental: this year, Chinese law dictates that automakers’ fleets must average less than 7L/100km, down to 5L/100km by 2020. The only way to achieve this is by introducing plug-in hybrid vehicles and almost all manufacturers present at the show had at least one new ‘green’ vehicle to display. Problem: focus too much on plug-in hybrids and you lose track of what really does volume in China. Let’s keep thing into perspective: even though they tripled year-on-year to 26,581 units during Q1 2015, sales of EVs and plug-in hybrids still only represent 0.4% of the overall Chinese market.
The last trend is overarching the entire market: millenials (consumers that started driving from 2000 onwards so born after 1980) are now front and centre of the Chinese market, due to their increasing purchase power. What millenials want, carmakers must provide in China.
If you only have time to read one article, here is what to remember about Auto Shanghai 2015.
1. Shanghai does big best
Researching about the shining new National Exhibition and Convention Centre located a 45 min-metro ride to the West of Shanghai city centre near Hongqiao Airport, I incredulously read it was ‘the largest building of its kind in the world’. Another exaggerated claim to entice me to attend the Show? Nope. Coming out of the metro station and having to walk just one quarter of the way around the venue in order to get my media accreditation took a good 20 minutes… There were 10 main exhibition halls, 8 on ground level and 2 on level one (meaning 6 remaining halls were left unused) for a total of 1.47 million square meters, 300,000 of which being exhibition floor. Auto Shanghai is the first event held in this new Convention Centre and is at least 3 times larger than any other Auto Show I visited, with the largest ones previously being Frankfurt and Paris. Two full media days starting at 8:30am and finishing at 7pm were just enough to visit all stands. This makes the Beijing Auto Show I visited last year look like two toddlers playing in an inflatable pool.
2. SUV’s Republic of China
In less than a year, SUV has clearly become the segment where fortunes are made in China. Every single sizeable Chinese manufacturer introduced at least one new SUV at the Show, some 2 or 3 including the concepts (Haval and BYD are among them). A very tough rhythm to follow for foreign carmakers… Indeed, as the overall Chinese market’s growth is slowing down to 4% overall so far in 2015, more profitable SUV sales are increasing at lightning speed: up 40% over the First Quarter of 2015. Chinese manufacturers have rushed to reclaim domination in this category, claiming 56% of their home SUV market over the period thanks to sales more than doubling compared to 2014.
This is a big deal as most analysts (including myself I have to admit) thought the market share local manufacturers had progressively lost to foreign carmakers was lost forever. The SUV segment shows that the Chinese, with improved design, microscopic price tags and efficient marketing, can still woo back their home crowd. We should look to the SUV craze to explain many of the big manufacturers fortunes or misfortunes in 2015 so far: If Hyundai (ix25), Kia (KX3) and PSA Peugeot-Citroen (C3-XR) have hit the ground running with China-exclusive offers developed in record times, the Volkswagen (-0.6%) and Toyota (-0.1%) brands have frankly underperformed so far, and this is mainly due to their weakness in the small SUV segment, where the explosive sales growth resides.
3. Toyota blinded by its hybrid love
The Japanese manufacturer, #1 in the world but clearly struggling in China with first quarter sales down 0.1%, focused all its energy at the Show on plug-in hybrid variants of its hot-selling Corolla and Levin sedans, also unveiling the Mirai to Chinese audience but without a clear launch date for this market. Plug-in hybrids and EVs are a mandate to be able to achieve the required average 5L/100km by 2020, and introducing plug-in hybrids of its popular compact sedans is the manufacturer’s first step towards that goal, aiming at a 30% share of hybrid in its overall 2020 sales. At the moment only Lexus achieves this within the Toyota Group in China, with the only other nameplate racking up significant hybrid sales being the Camry (5%). Yes but that’s not going to help with a daring mid-term goal of 2 million annual units in China.
Toyota is studying an EV collaboration with its Chinese partners FAW and GAC but openly admits this is purely motivated by government restrictions, as the manufacturer does not focus on EV anywhere else in the world but China. So Toyota is working hard to meet the Chinese government’s 2020 plan. Very well, but where are the SUVs? A round table with Toyota China CEO Hiroshi Onishi and Managing Officer Tetsuo Ogawa didn’t give me any more confidence that Toyota would be reaping the benefits of its worldwide SUV expertise in China any time soon. The #1 SUV manufacturer in the world with legendary models such as the Land Cruiser, Prado, RAV4 and Highlander, has inexplicably been caught by surprise in China. When I asked Testuo Ogawa about any plans to launch a B-segment SUV exclusive to China to compete with the likes of the Hyundai ix25, Kia KX3, Peugeot 2008 or Buick Encore he said “no plans, but it should definitely be considered”. You betcha!
4. Nissan young at heart
Nissan manages to tick the 3 trends’ boxes in one go by unveiling the all-new Murano hybrid SUV (two ticks) and a compact sedan designed by young Chinese for young Chinese: the Lannia (one tick). Nissan targets 1.3 million sales in 2015 (up from 900,000 in 2014) via 4 new launches including 2 SUVs. China is now completely front and centre in Nissan’s worldwide plans: out of the 5 Nissan plants operating in China, two of them are #1 and #2 Nissan plants worldwide in terms of quality output. Carlos Ghosn has its eyes firmly set on the #1 market in the world despite the slowing down of growth witnessed here: “China is still one of the markets with the highest growth in the world so we’re not disappointed in this. We are investing in China and will continue investing in China.” Can’t be any clearer Mr. Ghosn.
As he introduced the Lannia to the media, Carlos Ghosn described how the new Nissan was targeted at the core of the Chinese market: consumers born in the 80s and 90s, I thought it was a sick joke and he was pretending to be 20 years into the future. But no, fellow humans born in the 70s or earlier, this is 2015 when someone born in 1999 can drive a car legally. We are past our prime already, and manufacturers in China don’t really care what we want anymore. Good to know! But it makes total sense and thumbs up to Nissan for embracing this market shift openly and wholeheartedly.
5. Mercedes gets it. The only premium German to do so?
March sales of the Mercedes-Benz and Smart brands are up a whopping 21% year-on-year in China to 30,124 units whereas premium leader Audi was up only 1.5% to 48,356 deliveries. Year-to-date, Mercedes is up 17% and Audi is up 7% in a passenger car market up 9%. Mercedes is catching up fast, and it only took one look at their Auto Shanghai stand to be convinced that Audi and BMW should be worried, very worried. Mercedes kicked off media day on Monday with the first press conference of the entire Auto Shanghai, and their stand is a spectacular display of 46 vehicles, a testimony of the manufacturer’s growing confidence in and strong commitment to China. Mercedes is aiming at significantly more than 300,000 units in China in 2015 and Hubertus Troska, member of the Board of Management of Daimler AG, Greater China, said “we are confident China will become the biggest market for Mercedes-Benz, perhaps this year, but definitely by next year” as reported by China Daily.
If Audi and BMW succumbed to the government-led plug-in hybrid trend (Q7 e-tron, A6L e-tron and X5 hybrid), Mercedes rightly chose the hot hot SUV segment to bump its chest, and it looked great doing it. Just as the GLA kick started local production and is bound to be an instant blockbuster in the category (judging by the amount of imported GLAs already in Shanghai streets), the all-new GLE Coupé was first shown to a Chinese audience after its introduction at Geneva, and already a pet fave of mine: the GLC Coupé Concept had its World Premiere in Shanghai in a bright yellow robe. I want one today please. China cannot get enough sexy-looking luxury SUVs? Mercedes gets it and gives them. Where are you Audi and BMW?
6. Peugeot is Chinese
Despite showing not much new apart from a very enticing 500hp 308 hybrid, Peugeot gets a massive thumb up from me, as it demonstrated in the space of a few minutes that all the marketing fluff about being committed to the Chinese market and wanting to understand the consumer the best it can actually comes down to one thing: the language. With English as my second language and having studied Mandarin Chinese for a bit, I can relate to how hard it is to become fluent at a foreign language, let alone Chinese as there are no Western references to rely on when speaking it, listening to it, reading it or writing it. Peugeot brand CEO Maxime Picat spoke its entire 20 minute-speech in fluent Mandarin. No other foreign manufacturer at the Show came even close. Not only that, but I checked his prompter and there were no English references on it whatsoever. He was reading off Chinese characters and pinyin with tonal marks. Very impressed. Peugeot showed me their first market in the world is China.
7. US manufacturers ready to pounce
How did US manufacturers fare this year in Shanghai? Better than expected.
Ford, emboldened by the terrific success of the Escort, now its best-seller in China, started the Show all guns blazing, Western-style: it had it entire SUV lineup position at the very front of its stand, and it’s not looking bad: the Ecosport, Kuga, Edge and Explorer are all less than two years old, with the latter two showing their new face for the first time in China. And there was a surprise: an all-new Taurus specific to China now tops up the range above the Mondeo. Very distinct products and laser-sharp target markets for each is a winning recipe that Ford is using for China, and it works.
Ford also symbolises a new trend in China where the largest manufacturers are hoovering up idle capacity from smaller domestic firms. Indeed according to IHS Automotive, domestic manufacturers’ plants stand at around 60% capacity and international joint-ventures at 80-85%. Ford took advantage of this by acquiring a factory from Harbin Hafei Automobile Industry Group that will add 200,000 vehicles per year in capacity when upgrades are finished in 2016, at a much lesser cost than building a factory from scratch. All the more reason for Chinese manufacturers to keep spitting out SUVs in the hope it will bring their capacity figures back up.
In the same direction, General Motors is aiming at hitting a production capacity of 5 million vehicles per year by 2018 and its delivery at Auto Shanghai was also very strong. Buick is mixing tradition with modernity in its displays and introduced the all-new Verano only weeks after unveiling the new Excelle GT and well ahead of its US start. The Verano will slot in-between the Excelle GT and Regal (aka Opel Insignia). Chevrolet also satisfied with an aggressive facelift of its Malibu, here too well ahead of any US unveiling in the same way the new Cruze on sale in China has not much to do with the overseas model anymore, and this since the Beijing Auto Show last year.
One negative note though: Ford Motor’s Lincoln taking itself way too seriously, and whose overzealous assistants barred the entry to the stand to ‘Media only’. Hint: if I am here on a media day, that’s because I am media. Apart from this, Lincoln is making tremendous progress in China only one year after announcing its launch there. Lincoln unveiled 3 all-new models (MKX, new Navigator and Continental Concept standing for a vision of a full-sized sedan) added to the MKC and MKZ. Currently at 11 stores nationwide, Lincoln is opening 14 more this year (I saw one in construction in Pudong) with the objective to reach 60 dealers in 50 cities by 2016. But are they selling? Given all Lincoln models are imported they don’t appear in BSCB’s monthly rankings. Well, it looks like they are. According to the automaker, 3 of its Top 10 dealers globally by sales are now in China! Lincoln China’s President Robert Parker says “the interest of consumers in our current products has exceeded expectations”. To be continued…
8. Volkswagen still the people’s car
Volkswagen is still and by far the favourite in China’s heart. Proof: media were happy to wait in a long line just to get the manufacturer’s brochures! I actually don’t think I ever saw such a thing at any Auto Show before… Volkswagen models were displayed at two large separate locations at the Show: within the enormous SAIC Motor exhibition hall for the Shanghai-Volkswagen joint-venture and one very large stand where both the FAW-VW and Shanghai-VW joint-ventures’ cars were on display. Yes Volkswagen is losing market share with deliveries for its namesake VW brand down 0.6% in the first quarter, but that’s mainly because they don’t have a compact SUV and it remains the top selling brand in China by a country mile. Just after the start of the Show, Volkswagen actually announced they were mulling budget SUVs in partnership with Haval… Now that’s a good idea.
VW Gran Santana
So no SUV and a plug-in hybrid expertise already shown off, what did Volkswagen have for us to bite on? A very interesting move in my view: the brand is definitely taking the hatchback plunge. Building on the success of the Gran Lavida (10,000+ monthly sales since launch), the German manufacturer unveiled the Gran Santana – still under the Shanghai-VW joint-venture. To make things more confusing the Gran Santana and the Santata don’t have the same front. Sneaky.
9. Hyundai-Kia solid as ever
It’s always very refreshing to observe the Hyundai and Kia brands evolving in China. Why? Because being only a decade old in the country, none ever had to shed the poor quality perception that plagued them in other areas in the world during the nineties. As a result, China is a market where these two brands don’t have any inferiority complex and behave as premium brands would, with a slightly younger vibe for Kia, who was showing off it extremely well finished KX3 small SUV and a facelifted Sportage. Hyundai for its part had the new Tucson on centre stage, including a hybrid variant as well as the new Sonata. A very solid delivery from both Korean brands, once again. They never disappoint those two.
10. Renault lands: cool or not cool?
It’s official: 2016 is the year Renault will (finally) start manufacturing in China through its joint-venture with Dongfeng, which interestingly enough is also associated with Peugeot and Citroen. By the time the next Shanghai Auto Show comes along in 2017, Renault will have already had one full year of local production of its all-new Kadjar SUV under the belt. So you would think Renault-Nissan CEO Carlos Ghosn should give a warm welcome to the Chinese media at Auto Shanghai. Nope. This honour was given to Senior Vice President of Renault Corporate Design since 2009 Laurens van den Acker. So instead of showing how well Renault understands the Chinese market, who exactly they are targeting and how good a job they are planning to do to woo Chinese millenials over to what is essentially a mostly unknown brand in this country, we got a mismatch of wanky design-talk telling us all Renaults were designed with Life at the core of them (doh!) that went over the head of the entire audience, Chinese and French included. Really what we wanted to know was what on earth motivated you to wear those ugly red sneakers with your suit. As a Frenchman I am insulted. Being a designer is not an excuse!
Also, replicating the concept that has earned them praise in various Auto Shows, Renault brought the moving colour-changing globes to their stand, but made the fatal mistake of peppering the media floor with more globes where some had the luck (?) to uncomfortably sit whereas the majority of the audience was standing. Renault: I’m French so I have a lot of time for you, but you took us for fools in Paris last year, and you are treating the Chinese media with contempt under the guise of trying to be cool. I’m still not impressed. To end on a positive note, at least Renault understands it’s futile to venture too far from SUV land: its current best-seller in China is the Koleos, the Captur will be imported “in the coming months” said van den Acker and the Kadjar will be the first Renault vehicle to be produced in China. To my chagrin there are still no plans to launch the Duster which would be a hugely profitable vehicle for Renault in China. Perhaps not to share too much of the low-cost knowhow with partner Dongfeng?
The Honda Concept D could (should) be the next Crosstour.
11. Honda has its eyes on the SUV prize
While Toyota is getting caught in the plug-in hybrid net and Nissan ticks all boxes with the Murano hybrid and the China-specific Lannia, the third best-selling Japanese manufacturer in China, Honda, is hungry and it shows. Riding the compact SUV wave were the Vezel / XR-V (one for each joint-venture) in their throne right in the middle of the Honda stand, monopolising the brand’s giant LCV screen at the back and supported by an aggressive marketing campaign in the metro on the way to the Show and all through the venue. Good to keep the momentum: combined sales of the small SUV in February (12,019) and March (17,726) made it the brand’s best-seller. No less. But what tickled my fancy on the Honda stand is the very aggressively-designed Concept D, pre-empting another future SUV the brand will launch shortly. To me, it looks like a muscled version of next generation Crosstour, which although living its last months in the US, is alive and kicking in China.
12. The Qoros stand is where the party’s at
I disagree with the product and it seems like Chinese audiences (only 6,967 sales in 2014 vs. an announced production capacity of 150,000) as well as European ones (39 deliveries in Slovakia in the whole of 2014) agree with me. But you have to give it to Qoros: they know how to stage an attractive stand. You could barely find a way through the Qoros stand during the entire first media day so crowded it was: a press conference handled in a very different, debate-style way, complimentary coffee, confortable bar stools and free finger food. That’s why we come to Auto Shows, right? No. But yes. But no.
13. W Motors bursts onto the scene at 400km/h
No Chinese Auto Show would be complete without the launch of a new exotic supercar brand, preferably coming from some mind-blowingly wealthy Middle-Eastern owners. Here comes the W Motors Lykan, of which only 7 units will be produced worldwide. And the Chinese are lapping up the exclusive stand, aggressive silhouette and petrol dollar-inflated performances: W Motors claims 0-100km/h in 2.8sec, 0-200km/h in 9.4sec and a maximum speed of just under 400km/h…
14. Who the heck is G. Patton?
We have Dartz from Latvia, now introducing a brand I hadn’t heard of before called G. Patton, seemingly offering armored army-looking souped-up Ford F-150-based extravagant SUVs. The name I’m guessing stands for famous US Army General George Patton. All G. Patton’s documentation is in Chinese including their website g-patton.com, so bear with us as we try and find more information about this vehicle I want in my garage already…
15. But after all is said and done, it’s all about the Chinese.
Now that you are privy to the highlights of Auto Shanghai 2015 like you actually attended the show, it’s time to get to business. Real business. We are in China, in an international Auto Show that is in fact mainly attended to by the Chinese press, even on media days. 90 to 95% of all attendees during these two days were Chinese journalists and automotive professionals. The press conferences were rarely translated into English, and were duly attended to by a myriad of local media. I even got interviewed by CCTV, the No.1 Chinese TV channel, on whether I thought Chinese carmakers were catching up to their foreign counterparts (I do)…
You know it, the only reason why I am here at Auto Shanghai is not so much to check how Volkswagen, GM, Ford or Toyota are wooing the Chinese consumer, but to evaluate the progress of the numerous Chinese carmakers present at the show. Last year in Beijing I wrote about the 30 most impressive Chinese carmakers, and this year I will establish this ranking once again. One thing is certain: the Chinese have improved, and they did so very fast. Reading what impressed me in the Top 5 carmakers last year was like reading a report from 10 years ago. None of the Top 5 from 2014 would have made it into the Top 10 this year. Get ready for a new ranking and some feathers ruffled…