China auto show opens amid environmental, growth concerns

Leading automakers gathered in Beijing Sunday for China's biggest car show, expressing confidence in the world's largest car market even though lacklustre economic growth and environmental restrictions have generated uncertainty.

Spectators and journalists crowded around displays at the Beijing International Automotive Exhibition, which features more than 1,100 vehicles and opens to the public on Monday, while female models drew the attention of photographers.

General Motors, Toyota, Volkswagen and Hyundai are among the global manufacturers on the list of attendees, along with SAIC and Dongfeng, China's number one and two domestic automakers.

"This is obviously an incredibly important market for General Motors," its president Dan Ammann told reporters, saying China since 2010 had been the US automaker's largest market which now accounted for a third of total volume.   

GM's China president Matt Tsien said that "we're very optimistic with regard to the overall progress in the market" even though the world's second-largest economy was entering a phase of "more modest growth".   

At Ford Motor's display president and CEO Alan Mulally rode onto the stage in a bright red Ford Mustang, the latest incarnation of the iconic brand which is celebrating its 50th year.

"How cool is that?" he said after getting out, his red tie matching the paint job.

The expo comes as more cities are restricting the number of cars on the  road in a bid to battle pollution and congestion -- moves that analysts warn could cut into purchases.

The eastern city of Hangzhou, a popular tourist destination, last month became the sixth major Chinese city to implement such a restriction, with some estimates placing the limit at 80,000 car plates a year.  

China's car sales surged 13.9 percent to 21.98 million vehicles last year.

But that growth hit a speed bump in March, slowing to a 6.6 percent year-on-year rise after reaching a record 17.8 percent high in January.  

China's economy has also turned in its weakest performance in 18 months, growing 7.4 percent in the first quarter of 2014.  

Beijing has indicated a willingness to accept weaker growth as it tries to move the economy away from investment and toward domestic consumption.

Despite the concerns, industry players and analysts say the China market's importance to global manufacturers cannot be overstated.

"I think the market for cars is going to continue to be fantastic," Ford's Mulally told reporters, adding that the promise of increased domestic spending outweighed concerns about congestion.

China's overall plan "to move to a consumer-based economy" was a key factor "that reduces risk", he said.

"We are also working with all of the cities and the government because just to add more cars in the cities is not going to be the answer," he added.   

Ford has opened three plants in China since 2012, with four more under construction, Mulally said, adding: "This is part of our biggest global manufacturing expansion in 50 years".

Karsten Engel, president and CEO of BMW's operations in China, said Sunday the German automaker was introducing 10 new models to China this year, and carrying out more manufacturing and research and development inside the country.

"All these efforts are based on our confidence in the long-term development of our success here," he said. 

German auto giant Daimler said last month it had signed a deal worth one billion euros ($1.4 billion) with Chinese partner Beijing Automotive Industry Corporation to expand production at their joint venture based in Beijing.

CEO Dieter Zetsche told reporters on Sunday he expected premium car sales to rise faster than auto sales in general, adding that caps on vehicles "typically increase the share of the premium market".

Further underscoring China's significance in the car market, French auto giant Peugeot Citroen agreed earlier this year to hand over part-control to Dongfeng and the French state.

South Korea's largest automaker Hyundai Motor also announced in March it was planning a fourth plant in the country. (AFP)