This dealership in China expects to sell 3,500 Audis this year; a solid Canadian store will sell 800.
China. The doors are officially open. Some might argue they are car doors.
Guo Wei, general manager of the Automobile Sales Centre of Beijing Boruixangyun, certainly thinks so. We're standing in the middle of her Audi dealership in I guess what you'd call suburban Beijing. This store is bustling and buzzing like no car dealership I've ever seen.
Guo Wei, who studied for five years in Montreal and speaks very good English, tells me she expects to sell 3,500 new Audis this year - while servicing as many as 200 a day for matters big and small. A solid Canadian Audi store sells 800 new cars a year.
"Ten thousand? Can I sell 10,000 in a year? Maybe," she says with a huge, broad grin. "I work every day, 24/7. I sleep over there," she says pointing to a second-story apartment across the street, "and come to work every day. Every day. No time off."
With that sort of work ethic, and given China's new-car boom, she just might sell 10,000 a year. Keep in mind, vehicle sales in China soared by 32 per cent to 18.06 million units in 2010, according to data released by the China Association of Automobile Manufacturers. Passenger-car sales in 2010 reached 13.8 million units, 33 per cent ahead of 2009's total. Growth of the vehicle market will be around 10 to 15 per cent this year, CAAM has said.
How big is China's car market? The biggest in the world and it's projected by many in the know to reach 30 million in sales a year by the end of the decade. Some say 30 million by 2020, but others say 40 million. Yet even if the Chinese market only grows by 10 per cent this year, that's 1.8 million additional units.
These are mind-boggling numbers to a Canadian. Our new-vehicle market runs between 1.5 million to 1.6 million units sold a year, with about 100,000 of those premium cars. China's premium market is 10 times that and growing.
"China is on its own trajectory," Thomas McGuckin, Pricewaterhouse Cooper's Asia Pacific leader, told just-auto.com. "It's truly breaking away from the rest of the world."
In China, Audi and many other auto makers talk about a lack of capacity to meet demand, as well as a dearth of new-car dealerships. Audi, for instance, is opening a new dealership in China every week and plans to increase the number from about 175 to 400. Other foreign brands, like Ford, are opening dealer networks at a pace of two a week. As for brands, GM unveiled a new China-only brand just recently and Ford is considering the same. So is VW.
"We just can't move fast enough," said Joe Hinrichs, Ford's president of Asia Pacific and Africa, in an interview earlier this year. "It's this incredible mix of opportunities, risks and complexity."
What I saw in China mostly was growth. It's everywhere. New roads, new buildings, new everything. The energy on the streets is electric. Over and over, I heard Chinese workers talk about "getting along with my life." That means moving ahead economically and quickly.
The right to vote? Don't bother trying to discuss that. No one wants to go there. But work, and travel and real estate and consumer goods from cars to big-screen TV and smart phones - my Chinese acquaintances were more than willing to go there in conversation.
After a few days in Beijing, I headed to Changchun, a gritty industrial city of about five million in northeast China. As I stood in front of the first auto factory dedicated by Mao Zedong himself in the early 1950s, I watched a long string of workers in uniforms heading back to work. They were laughing, though clearly disciplined and prepared to work.
That was the old. The new auto industry in China was just a 180-degree pivot away. There facing the old plant is the headquarters of FAW, or First Automobile Works. It represents a joint venture with Volkswagen and its biggest luxury brand, Audi.
The FAW complex is something along the lines of Toyota's Toyota City in Japan. It is massive, a small city unto itself. Hundreds of thousands of new vehicles are built in joint-venture factories every year.
FAW itself is part of the two main blocks of players that define the auto industry in China: on the one hand are the giant Chinese state-owned auto makers that include Shanghai Automotive Industries Corp. (SAIC), partnered with General Motors; on the other are independents such as Geely, which owns Volvo Car Corp.
The joint ventures control about two-thirds of the Chinese market, though China's government would like to see local nameplates control 44 per cent of sales. This drive to create a more independent auto industry stretches the length and breadth of the car business in China and it includes an increasing level of locally based research, development and design expertise. I visited one software design centre where engineers were deeply immersed in refining and testing infotainment systems. These sorts of centres are popping up everywhere.
And it's all quite shocking for a Westerner who arrived in China with biases and preconceptions. I expected to find a country of copycat car designs, where reverse engineering and the theft of intellectual property were commonplace.
Obviously some of that is happening, but what I saw mostly was a country of people committed to growing China's economy and standard of living. Sure, China's government is a totalitarian oligarchy - a leadership committed to economic growth in a climate of suppressed human rights - but the nature of China's government is not something that impacts on the everyday lives of most workers.
Politics and human rights aside, what's happening in China is nothing short of amazing. In the auto industry, we're talking 10 years of feast with no hint of famine. Consider: in 2002, the year the car market suddenly started to accelerate, just-auto.com notes in a report, annual sales reached 1.2 million. Sales were more than 10 times that last year.
The explosive growth brings its own problems. That's why Chinese cities are introducing measures to restrict car sales. The local road infrastructure is struggling to cope with traffic congestion, therefore cities such as Beijing are using lotteries to limit the number of sales each year. China Daily reports that Beijing city authorities announced they would only allow 240,000 new-vehicle registrations this year - roughly one-third of 2010's total.
Here's the problem: the National Bureau of Statistics says China had 79 million cars on its roads in 2009, but officials at China's Ministry of Industry and Information Technology predict the roads will need to absorb 200 million cars by 2020.
Many of those cars are built in Changchung, where Audi's FAW joint venture produced A4 sedans and Q5 SUVs for what I was told are status-conscious Chinese consumers. Ownership of an authentic prestige brand such as Audi, BMW or Mercedes-Benz is a sign of status, I learned. There is also a market for "copy" cars, a just-auto.com report notes. As a result, there is a market for domestic-brand designs that look very similar to real foreign designs - "knock-offs," in the vernacular.
After a week in China, I left convinced the auto industry is real and growing and impressive beyond anything I had imagined. During this decade we're going to see China reshape what has for 125 years a Western-dominated industry. What might just emerge is not merely an eastern or western car business, but a global one.
Astonishing.