(Agencies)
Updated: 2008-04-22 15:45

He sees bicyclists and rural families moving to small, basic vehicles; young professionals buying small sedans and luxury vehicles, and successful entrepreneurs fueling the rapidly expanding luxury market.

Already, wealth on the coast is beginning to percolate inland to the communities China considers to be its second- and third-tier cities -- those with 5 million to 15 million residents -- and even to its more rural areas.

Until now, most growth in personal wealth -- and therefore automotive sales -- has been in the largest cities closest to the coast. But as wages rise in those larger cities, some manufacturing jobs have moved inland.

GM China Group president and managing director Kevin Wale said that worldwide, the annual income that typically moves a household into the realm of car buying is $5,000, but in China, he said, it's closer to $3,000. And experts say the average incomes in many of China's mid-level cities is now approaching that level.

The Chinese economy already has exploded from a gross domestic product of about $1 trillion in 2000 to about $3.4 trillion last year. CSM Worldwide forecasts that it will grow to greater than $5 trillion by 2014.

And the expectations of Chinese consumers have changed, too.

Courting Chinese buyers

Just a year and a half ago, Hao Chen, 27, bought his first car, a practical vehicle. Now he is looking for a second, sportier and more comfortable car.

"Five or six years ago, 60 percent to 65 percent of car sales were to government fleet," said Joseph Liu, executive vice president of GM China group. "Now, it is reversed. 60 percent to 65 percent of sales are to private buyers."

And everyone is scrambling to win them over.

GM, whose joint ventures were the first to sell more than 1 million vehicles in a year in China, will show 42 models in Beijing this year, including the new Buick Invicta concept car. The Invicta, which was unveiled on April 19, was designed jointly by engineers at the Warren Tech Center and the Pan Asia Technical Automotive Center joint venture in Shanghai.

Ford will have the largest stand in the history of the Beijing auto show, with 55 vehicles on nearly 60,000 square feet. On Saturday, the automaker revealed its next-generation Ford Fiesta five-door hatchback for the Asian audience.

Chrysler's chief executive officer, Robert Nardelli, said last week that the automaker is looking to create more partnerships in such rapidly growing markets as China. The automaker is expected to show 19 vehicles, including the Asian debuts of the Dodge Journey, the two-door Wrangler and a special edition 300C.

China's domestic automakers will be out in force as well, with Chery Automobile -- the nation's largest domestic auto manufacturer -- showing a full lineup of everything from subcompacts to an SUV.

BYD Auto Co plans to unveil its own plug-in electric vehicle, aiming for sale in 2010. Geely Automobile Co says it plans to show several larger models with more luxurious styling.

Some experts said they have seen car buyers -- who primarily pay in cash or cash equivalent -- put off a car purchase as long as a year so they could get a vehicle more stylish, comfortable and luxurious than what they can afford today.

It's a phenomenon that could benefit the more established companies, such as the Detroit automakers, who have long catered to demanding customers in competitive markets, rather than the domestics who have often catered to customers by offering lower prices -- and commensurate quality.

As Chinese consumers become more discriminating, China's domestic automakers will have to improve their quality or unwittingly give up their places in the market, analysts say.

"It is a market in which everyone wants to play," GM's Wale said. "It is the most important market in the world."

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