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Apr.21

11:10 AM ET

Monday, 21 Apr 2008

Beijing Auto Show: Is It Bigger Than Detroit?

Posted By:Phil LeBeau

Sectors:Technology | Automobiles and Parts

Companies:Nissan Motor Co., Ltd. | Toyota Motor Corporation | General Motors Corp | Honda Motor Company, Ltd.

Talk about coming of age. The Beijing Auto Show and China's auto market are making a statement this week. It's loud and clear: "We are world players!"

In fact, it brings up the question about whether this show and the Chinese market are bigger than the Detroit Show and U.S. Market?

GM CEO Rick Wagoner meeting with reporter after unveiling the Cadillac Escalde 2 mode hybrid.

Relax. I know some of you are reading this and thinking, "Toyota Phil is so dumb. The U.S. Sales are double the amount sold in China.". That's true. But I'm talking about why this show and this country's auto market are becoming so important.

First, China auto sales are growing so fast the country will pass the U.S. to become #1 in the world within a decade. It's the reason GM, [GM Loading... () ] Toyota [TM Loading... () ], Honda [HMC Loading... () ] and other automakers are making China a top priority.

Caddy display

Second, The Chinese are spending big bucks buying news cars. Roughly a third of the cars and trucks sold in here go for $25,000 or more. That compares with 60 percent doing the same in the U.S. In other words, there's big money to be made here for automakers. This is not like India, where the growth will be in smaller, less profitable cars.

Third, almost all of the world's automakers play in China. This is not like the U.S. where many automakers are nowhere to be seen. Citroen, Peugeot, Renault, Fiat, Opel, Daihatsu, and a slew of Chinese auto makers are here. In all, 46 automakers build and sell models here. Why? Because only 15 percent of the Chinese adults own a car. There's immense growth potential here.

The new Chevy Aveo, built in the GM Daewoo plant in South Korea. It's one of the fastest smalling cars in the world.

Fourth, auto execs are increasingly putting the Beijing show on their calendars and using this event to unveil models that will be sold around the world. Nissan's [NSANY Loading... () ]Carlos Ghosn is here. So is GM Chairman and CEO Rick Wagoner. They know China is the future and THE place to grow profits since the U.S., Western Europe, and Japanese markets are slow.

Chevy Volt

All of this is not to say Detroit and the U.S. market have become irrelevant. Far from it. The U.S. is still the biggest market. The Big 3 still wield sizable clout. But, the orbit of the auto world is increasingly tilting toward China. That means the Detroit, Frankfurt and Tokyo auto shows will have to adjust and share top billing with the Beijing show.