What to expect at the Shanghai auto show

April 18, 2013: 10:41 AM ET

The growth of the Chinese auto market, once a playground only for the wealthy, is being fueled more and more by consumers who aren't elite. At the same time, the rich are buying more luxury than ever before.

By Doron Levin

shanghai-auto-show-614xaFORTUNE -- Back in the day when Toyota (TM) and the rest of Japan Inc. appeared on the verge of capsizing U.S. automakers and suppliers, industry figures dutifully boarded airliners every two years to attend the Tokyo Motor Show in a search for facts.

The must-attend Far East venue for auto experts these days has become Shanghai. The People's Republic, once a place where private property and luxury were officially scorned, has turned into the biggest, glitziest, and fastest-growing vehicle market in the world.

Brushing off fears of an economic slowdown, auto sales in China rose 13% in March and are on pace to break 20 million passenger vehicles in 2013 -- a level never achieved in the U.S. Accordingly, Auto Shanghai 2013 is expected to be the biggest since it was started in 1985, surpassing the last show in 2011 that attracted nearly 10,000 journalists.

All major global auto manufacturers, plus scores of smaller Chinese companies, will be exhibiting at the show. Paul Eisenstein, publisher of TheDetroitBureau.com, an automotive website said, "In the decade since I first attended the Shanghai Auto Show, I have watched it transform from an almost irrelevant backwater event into one of the more significant and important shows on a busy calendar."

MORE: 11 cars in need of a makeover

But Eisenstein noted that Chinese organizers of the show, which this year starts on April 21, still aren't quite as facile as required in handling logistics of cars, people, and press conferences. There's "almost a comic sense of confusion," he said.

Automotive News said this year's top automotive debuts reflect what automakers believe will be a repetition in China of the crossover trend, which has swept the U.S. and is taking hold in Europe. Crossovers, built on car chassis, have been rising in popularity as heavier SUVs with pickup chassis have been declining.

BMW chose the Shanghai show to introduce its X4 crossover, a luxury vehicle that will be built in South Carolina, mostly for export. In all likelihood a small number of this model will be sold to Chinese consumers – wealthy ones.  The choice of venue reflects the global visibility BMW attaches to it. Also planned for introduction are Jeep's new Cherokee, as well as crossover or SUVs from Acura, Mercedes-Benz, and Volkswagen.

Though China doesn't yet export to the U.S., motor heads with a taste for the unusual may be interested in Changan Automobile's Zhishang XT, a hatchback, and the Qoros hybrid, the product of a Chinese-Israeli joint venture.

MORE: Ford and Toyota feud over whose is bigger

The growth of the Chinese automobile market, once a playground only for the wealthy, is being fueled more and more by consumers who aren't elite. At the same time, the rich are buying more luxury than ever before. People's Daily noted that Carat Security Group, a 135-year-old Belgian company that modifies cars with armored plating, will be among the exhibitors. A Carat executive said that the Middle East, Africa, Russia, and Latin America are its main markets, though China is a target of future growth.

China currently is the second-largest single market worldwide for Rolls-Royce and Bentley.

U.S. automakers probably have learned their lesson that paranoia about Japan was never well-founded; in fact, the competitive pressure arguably helped make Detroit more competitive. Likewise, a robust market in China has turned out to be a great place for General Motors (GM) and Ford (F) to sell cars. It will be some time before anyone in DesMoines considers buying a Zhishang XT.

Join the Conversation
Search This Column
View all entries from this: Week, Month
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.