While China may have difficulty achieving its economic growth target of 8% this year, with 5% to 6% the more likely rate, the world's most populated nation is having no trouble attracting foreign automakers and suppliers. China built 1.58 million vehicles in 1997, selling 1.56 million, up 6.4% from 1996 despite a soft year. But the potential sales in a country of 1.2 billion people is the real lure.
But with cutthroat competition already sparking a brutal price war, the government's plan to consolidate more than 100 domestic automakers into three large conglomerates brings both promise and dread. Where, for example, will U.S. car companies and their suppliers fall in? Chrysler Corp. has long made Jeeps in Beijing; Ford Motor Co. recently began producing Transit Vans in Nanjing, and General Motors Corp. is about to launch Buicks in Shanghai.
Shanghai Volkswagen Automotive Co. Ltd., which makes Santana sedans, is the most successful automaker, selling more than 200,000 units annually. VW also has a venture with First Auto Works. Peugeot, Daihatsu, Suzuki and Subaru also share in top ventures.
But with economic and political reforms throwing millions of Chinese out of work and a slumping export market, will there be enough citizens able to afford a new car in the near future?
