World's top auto market becomes broader, smarter, greener
From electric SUVs named after a Chinese city to self-driving trucks, an ongoing auto show in Shanghai has displayed the new ambitions of global brands to dig into the world's biggest car market as it bounces back from the COVID-19 pandemic.
The 19th Shanghai International Automobile Industry Exhibition — also known as Auto Shanghai 2021 — is the world's first major auto show to run normally this year, kicking off on April 19 and opening to the general public from Saturday.
According to organizers, about 1,000 enterprises from all over the world are participating in the auto show, which boasts a total exhibition area of 360,000 square meters. International carmakers including Audi, Benz and General Motors are showing off their new models.
Green and smart technologies also figure prominently at the fair, with auto manufacturers eyeing new opportunities amid China's goal of going carbon-neutral and building a more tech-savvy car industry.
After years of preparation, the joint venture (JV) between China's major carmaker SAIC Motor and German car brand Audi has shown its first fruits, with two models debuted at the exhibition.
The cooperation between SAIC and Audi not only reflects the growing importance of Chinese consumers to global brands but also the vitality and openness of the Chinese auto market, said Jia Mingdi, president of Audi sales and marketing, SAIC Volkswagen Automotive Co Ltd.
SAIC is now the second Chinese partner of Audi after Audi's long-standing partner First Automotive Works (FAW). SAIC Audi plans to launch four new models in the next three years, Jia added.
The debuted SAIC Audi models included a sedan customized for Chinese consumers and an electric SUV named "Audi concept Shanghai," the first time that Audi has named a new model after a city, according to Jia. The JV is also cooperating with Chinese tech giant Tencent to launch car-mounted WeChat to cater to Chinese drivers.
"International carmakers used to sell in the Chinese market whatever was manufactured back home without thinking much. Now they must first figure out what Chinese consumers need before producing it," said Jia.
China's auto market performance beat the forecast in 2020. The number of automobiles sold in the country totaled 25.31 million last year, down 1.9 percent year on year, narrowing 6.3 percentage points from the decline seen in 2019, according to the China Association of Automobile Manufacturers (CAAM).
Despite being hit hard by the COVID-19 pandemic in the first quarter of 2020, both production and sales have bounced back quickly since April, as factories reopened and pent-up demand was unleashed.
"The Chinese auto sector bottomed out in 2020," the CAAM said, adding that as the Chinese economy continues its stable recovery, auto sales are expected to exceed 26 million units in 2021, up 4 percent year on year.
Apart from its sheer size, China's auto market continues to lure foreign investment due to the considerable potential that its relatively low car ownership represents, said Zhou Minhao, president of the Shanghai Council for the Promotion of International Trade.
By early 2021, China's vehicle density stood at 205 vehicles per 1,000 inhabitants, compared to 871 vehicles per 1,000 inhabitants in the United States, according to the latest analysis from the German Center for Automotive Research (CAR). While the US market is saturated, China still has "great growth potential," said the CAR.
The auto show also sheds light on the industry's urge to jump onto the green-tech bandwagon, as China, which is already the world's No.1 new-energy vehicles (NEV) market, pushes for clean-energy use in its auto sector.
During the fair, Volkswagen's China JV SAIC Volkswagen debuted a pure-electric SUV "ID.6 X," the second model produced by its new NEV plant in China. The Shanghai-based plant started mass production late last year and is expected to launch another electric model this year.
"SAIC Volkswagen will launch a variety of new-generation pure-electric vehicles in the future, which will help the Chinese market accelerate the realization of the carbon-neutral goal," said Yang Siyao, Executive Director of VW Marketing & Sales Business, SAIC Volkswagen Automotive Co Ltd.
Sales of NEV in China jumped by 2.8 times year on year to 515,000 units in the first quarter, data from the CAAM showed. In March alone, NEV sales surged 2.4 times year on year to reach 226,000 units.
The better-than-expected NEV sales came amid government efforts to promote eco-friendly cars and rising market enthusiasm for them. In November last year, China unveiled a development plan for its NEV industry from 2021 to 2035 that aims to accelerate the country's transition into an automotive powerhouse.
The proportion of new NEVs in the sales of new vehicles is expected to rise to 20 percent by 2025, and vehicles used in public transportation will be completely electrified by 2035, according to the plan.
Another highlight of this year's auto show is the deep involvement of tech firms, which are teaming up with vehicle manufacturers on cutting-edge technologies such as autonomous driving.
During the event, China's ride-hailing giant Didi announced cooperation between its autopilot company and Volvo on autonomous driving technologies, while Chinese drone maker DJI debuted its self-driving system.
IM Motors, a Shanghai-based intelligent electric vehicle brand, offered a glimpse into the tantalizing future of autonomous driving by displaying new sedans capable of being summoned via a mobile app to pick up drivers and the ability to find a parking space and park on its own.
The futuristic functions will be realized in certain commercial districts of cities including Shanghai by the end of 2021, assuming the laws allow it, said Chris Chen, the person in charge of the brand experience of IM Motors.
Industry observers have pointed to Chinese consumers' growing expectations for smart cars and autonomous driving. According to a 2019 report from McKinsey & Company, Chinese consumers' acceptance level for autonomous vehicles was 80 percent, double that of Germany and the United States.
"By 2025, China is expected to achieve 70 percent of new mass-produced vehicles with Level-3 autonomous driving, and Level-4 self-driving vehicles will begin to be applied on a large scale," said Hou Fushen, deputy secretary-general of the China Society of Automotive Engineers.
In self-driving technologies, Level-5 indicates full automation, followed by Level-4 and Level-3, which allow vehicles to navigate without drivers in certain conditions.
Hou said that the country is expected to achieve mass production of Level-5 vehicles by 2030.
Compared with many countries in Europe, China has been pushing for technological innovation at a "rapid pace and with unparalleled momentum," and has become a market "that is the center of the auto world and that no one can do without," the CAR analysis said.