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Carmakers tailor new models to China

Published: Thursday, April 19 2012 9:19 p.m. MDT

Guests visit the Shanghai International Auto Show, China's biggest auto industry show, last year.

Associated Press

BEIJING — Automakers are bringing SUVs and luxury sedans designed for Chinese buyers to China's biggest auto show this year as they scramble to keep sales growing amid a slump in this giant market's once-explosive demand.

Sales growth in the world's biggest auto market plunged from an eye-popping 35 percent in 2010 to just 2.5 percent last year as China's economy slowed. That is forecast to rebound to about 5 percent this year — stronger than the United States or Europe but a challenge for automakers that added new assembly lines during the boom, leading to a glut of supplies.

General Motors, Honda, BMW and other global brands, as well as ambitious Chinese rivals such as Chery and Geely, are wooing Chinese buyers hard at Auto China 2012, which opens next week. World premieres are planned for three Ford SUVs, a Fiat 500 co-designed with fashion house Gucci and a Range Rover styled by designer Victoria Beckham.

Automakers that used to sell the same models in every market with few changes for local tastes are creating models tailored for Chinese buyers.

As competition heats up, foreign car makers that have invested billions in China are seemingly unfazed by the recent slowdown in sales. Ford on Thursday announced plans for a $760 million factory in the eastern city of Hangzhou that along with an earlier announced expansion in Chongqing will double its China production capacity to 1.2 million vehicles a year.

Companies such as Ford expect to continue benefiting from Chinese preferences for foreign car brands. They also expect the market to get much bigger in the years ahead. Even with 30 million cars on the road, China still has just 28 vehicles for every 1,000 people, far below the U.S. level of 800. Some 80 percent of purchases are by first-time buyers.

"You have a lot of potential demand for many years to come," said Michael Dunne, president of Dunne & Co., a Hong Kong-based industry researcher.

China passed the United States in 2009 in number of vehicles sold, and sales last year totaled 18.5 million vehicles. The country is the biggest market for automakers from giants General Motors Co. and Volkswagen to specialized producers such as Rolls Royce, owned by BMW AG.

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