Big hopes for the West

Chengdu auto show signifies appeal, potential of regional market to carmakers

Forty-year-old Zhao Wanchuan circled a Hyundai SUV before slipping into the driver's cabin and putting his hands on the steering wheel. Then, after feeling the dashboard for a while, he slipped into the back seat. A few minutes later, he pored over the car's trunk.

"This model costs 15,000 yuan ($2,442) more than the same unit in Shanghai," he said in a strong Sichuan accent disappointingly before moving on to his next vehicular target across the aisle.

For those who want to spend, their due diligence about their "prey" can never be too detailed.

Zhao was just one of thousands of residents from Chengdu, capital of Southwest China's Sichuan Province, who visited the ongoing Chengdu Auto Show, one of China's four biggest, over the weekend.

A total of 102 auto brands appeared at the auto show, the 17th annual event that kicked off on Friday. The venue is a crescent-shaped 150,000-square-meter modern exhibition center located in the city's brand new southern district.

In recent years, Chengdu's auto sales have grown by an annual rate of 20 percent, media reports said.

The number of dealerships located in southwestern and northwestern China accounted for 18.6 percent of the nation's dealerships in 2012, up from 2008's 14.4 percent, the Guangzhou-based Moneyweek reported Monday, citing data from the China Association of Automobile Manufacturers.

Such a shift of focus comes as no surprise, as automakers and dealers fret about an increasingly saturated market in the coastal regions, where a number of cities have imposed car license limit schemes that have handicapped car sales.

Western development

The Moneyweek report said statistics released by the National Information Center showed that the nation's western provinces have been gaining in terms of car sales. From 2007 to 2011, the national sales share of the western market rose from 18 percent to 22 percent, while the eastern market's share fell from about 60 percent to about 50 percent.

Duan Jianjun, executive vice-president of Sales & Marketing, Beijing Mercedes-Benz Sales Service Co, said his company is committed to the western market and brought along three new offerings to the auto show.

"Mercedes-Benz's western sales district, with Chengdu and Xi'an [in Northwest China's Shaanxi Province] as its pillars, demonstrated strong growth," Duan told the press at the show Friday, adding "domestically manufactured units accounted for 56 percent of the sales total."

A particular fondness for SUVs has been observed in the western market.

In the first seven months of 2014, sales of the Mercedes-Benz GLK SUV doubled in the western market from the same period last year, according to Duan.

Nissan's premium brand Infiniti is particularly enthusiastic about the western Chinese market.

Daniel Kirchert, managing director of Infiniti China, said that Chengdu's signature trendy and relaxed style matches with the Infiniti brand perfectly, noting that his company set up a district office in Chengdu this year to boost sales in the local market.

"In the eastern market, we are a latecomer. But here, everyone gets to play from ground zero," Kirchert told the Global Times Friday.

The western market also features a great number of fourth- and fifth-tier cities, and therefore it will take more time to promote the Infiniti brand, Kirchert said.

Infiniti unveiled two new models, one of which will be manufactured in the company's new plant in Xiangyang, Central China's Hubei Province.

A number of sales representatives at the auto show told the Global Times their booths were seeing dozens of booking orders every day.

But not every news was so positive.

"[The type of] customer has changed, compared with last year. Today, customers ordered 50 units, which is more than last year's show's daily average, but the gross value of these cars is less than last year's as more orders are placed on cheaper models," Xue Xiaomin, a sales representative at one of Buick's local dealerships, told the Global Times.

Xue said the best-selling models are the company's mainstream products rather than high-end ones.

Go electric

New-energy cars have been one of the most eye-catching attractions in China's auto shows in recent years.

A man surnamed Huang and his wife were both interested in the BYD Qin plug-in hybrid sedan, but when asked whether they will purchase one in the near future, they shook their heads.

"We will continue to follow the development of these vehicles, but we won't buy a domestically manufactured one - quality remains a concern," Huang told the Global Times Sunday. "The lack of a public charging network is another problem. Charging at home takes a whole night."

Chengdu has one advantage in that its populace has no problem in accepting the electric cars. As a city with less than 15 million people, there are about 4 million electric-powered scooters that form an omnipresent flow on the street, according to a report by Chengdu-based Tianfu Morning Post in August.

At a booth, a BYD manager, who asked not to be named, said differing policies in different cities have been temporarily affecting sales of the Qin.

"Some cities have already rolled out policies [on subsidies], and some, including Chengdu, are yet to have such policies," the manager told the Global Times on Saturday. "That puts a damper on consumer demand."

Local governments in a number of cities such as Beijing, Wuhan and Luzhou (a city in southeastern Sichuan) have lent firm support to the proliferation of new-energy vehicles, according to media reports.

Consumers buying government-approved vehicles will be able to enjoy a subsidy given by the local government on top of a national subsidy, which will be worth the same amount given by the central government.

The combined subsidy could be as high as 66,000 yuan whereas the Qin is priced around 200,000 yuan, according to media reports.

In pure electric mode, the Qin could cover 70 kilometers, and given the size of Chengdu, the Qin is a good choice, the manager said.

"I know of customers who bought subsidized Qins in Shenzhen, over 2,000 kilometers from Chengdu, got their license plates there, drove their cars back," he said, noting that he hopes Chengdu could soon join the list of cities that have strong policies.

Wang Qing, a Chengdu taxi driver in his 30s, said he is considering buying a Qin for personal use.

"Other than its price, I am satisfied with the Qin. I just need to wait one or two years more for a little bit more competition to cause prices to fall and for the public charging network to expand," Wang said.