the world — all categories, not just cars — will occur in China,” said Don Butler, vice president of marketing for General Motors Co.'s Cadillac brand.
GM is bringing new production this year to China, which is already is the second-largest market for its Cadillac. BMW AG sells more cars in its home base of Germany than it does in China.
“The first car people buy is for transportation,” said Klaus Paur, global head of automotive for forecasting company Ipsos SA of Paris. “The second is for brand name.”
And that desire for internationally known brands is driving more opportunities for Korean, Japanese, European and North American cars, both imported and produced in China, as well as suppliers that can produce the same-quality parts in China as elsewhere in the world.
Global parts makers such as Magna International Corp., SRG Global Inc., International Automotive Components and Faurecia SA have expanded production to keep up with increased demand during the past few years, while Chinese firms have pushed to improve their capabilities.
“When we first started, we were doing localization,” said Todd Fortner, president of CAIP Group, based near Shanghai in Changshu. “The big challenge was moving in the last eight to nine years to create the [ability] to make world-class automotive interiors for BMW or Audi.”
CAIP is building a plant near Beijing to supply Mercedes. Through joint ventures with key global firms, it makes interior trim and exterior trim including bumper fascia. The company is the second-largest producer of door panels in China, Fortner said. Its capabilities cover multishot molding, overmolding and complete cockpit assemblies.
Domestic Chinese automakers dominate the market for lower-priced vehicles selling for less than $15,800, Paur said, although some small international brands now are available in that price range. Those nameplates' presence is increasing the pressure on domestic companies to improve their quality, including in better-fitting and finished injection molded interior trim.
Above that price level, the international firms dominate, taking up as much floor space for their displays at China Auto 2012 as Chinese firms. The featured vehicles rotating on turntables at the expo center in Beijing bore the same name badges as those at any other auto show.
Honda Motor Co. Ltd. showed off a concept for the next version of its Accura NSX sports car — the same concept first introduced four months earlier at the North American International Auto Show in Detroit. Tokyo-based Honda will introduce the final production version of the NSX in China at the same time as in the United States.
“We believe our unit sales in China will rival the U.S. sales soon,” said Honda CEO Takanobu Ito.
Sales are doing more than merely rival the U.S. for some carmakers. China is now the top market for superluxury brand Bentley Motors Ltd., although — like Lamborghini — its target market is a very limited number. If Lamborghini makes the Urus, which would use its proprietary carbon-fiber production method for its structure and feature carbon fiber in its interior, Winkelmann said it would set annual production at just 3,000 vehicles.
China already has enough wealthy buyers on hand to support that ultraluxury.
While the average annual income in China is less than $4,000, that average covers a range of individual salaries. Income is closer to $15,000 in key cities like Shanghai, Beijing and Hong Kong, but only $1,100 in rural areas.
The high end of the scale is expanding, though.
Globally, China has the fourth-largest population of “high-net-worth individuals” — people with assets greater than $1 million — according to the “2011 Asia-Pacific Wealth Report” from consulting group Capgemini and Bank of America Corp.'s Merrill Lynch Global Wealth Management.
In response to that growing demand from new buyers with cash on hand, the auto industry is trying to identify the style and vehicle cues the Chinese consumer wants.
Because most sedans sold in China are used for multiple-person transportation, Germany's BMW is building China-specific versions of its sedans with a longer wheelbase, providing an additional 3 inches of leg room for rear-seat passengers.
Nissan Motor Co. Ltd.'s Infiniti brand recently moved its global headquarters to Hong Kong to help it tap into growth, while Detroit-based GM will begin making the XTS luxury sedan in China this year, just a few months after production launches in North America.
“We look at this market over the long term,” said Dan Akerson, GM's chairman and CEO. “It's high-growth, high-price and high-reward and requires a lot of on-the-ground work.”