Car sales to change up a gear after WTO

Car-makers were out in force at yesterday's opening of the Shanghai motor show, hoping to hitch a ride on an expected upturn in demand after China joins the World Trade Organisation.

Manufacturers and importers rolled out stretch limousines, sports cars and more modest family sedans for thousands of eager customers and curious onlookers at the cavernous Shanghai New International Expo Centre.

While much of the world economy is stuck in neutral, China is cruising along at a fairly impressive speed, keeping car sales at healthy levels.

Demand for cars could get a boost next year from the mainland's entry into the WTO - a move that will bring down import duties and force domestic prices lower. As a result, many consumers have been waiting to see how far prices will come down before parting with their money.

'There is pent-up demand,' said Hua Mingyao, vice-president of First Auto Works Volkswagen, a joint venture that builds cars such as the Jetta and new Bora models in Changchun, in Jilin province.

'Next year, we will see import duties come down and there will be more pressure on prices. We could see [overall market] growth rise to 10 per cent next year from 7 per cent this year,' he said.

Industry executives estimate the size of the car market is 600,000 cars a year, and a drop in prices could boost this total.

Chongqing Changan Automobile, a car-maker that has ties to both Suzuki Motor of Japan and Ford Motors of the United States, is also expecting to see faster sales growth next year, partly as a result of China's entry into WTO.

The company released its new Happy Prince model - built in co-operation with Suzuki - in a bid to capture more of the market's lower price segment.

'There's a lot of competition but we are looking to do well next year with this model,' said Li Xiaogang, a Chongqing Changan executive.

One of those who might account for some of the pent-up demand is businessman Tian Weilong.

'The market is in transition now. Import duties will come down next year and this will shake things up. The key factor in my purchase will be the price,' said Mr Tian.

Another visitor to the show, who gave his name as Mr Jiang, said he too expected to make a purchase next year. 'I'm looking now and would expect to buy something in the 300,000 yuan [about HK$281,130] range,' he said, adding financing would be a factor.