Automakers step up in China as West wobbles

By Fang Yan and Chang-Ran Kim

BEIJING (Reuters) - Automobile industry executives at Beijing's bi-annual auto show forecast another boom year in China in 2008, with sales in the world's No. 2 car market rising and production ramping up to take advantage of lower costs.

Global automakers such as Volkswagen AG (VOWG.DE), General Motors Corp (GM.N) and Toyota Motor Corp (7203.T) are increasingly relying on emerging markets such as China to take up the slack as U.S. and European consumers feel the pinch from slowing economies and rising prices.

"I say this internally all the time, but the company that gets China right is going to be the dominant player for the next 25 years," GM Chief Executive Rick Wagoner said at the Beijing Auto Show.

GM's China sales lagged in the first quarter due to winter storms that disrupted shipments, but the company ranked No. 2 by production in China last year is forecasting a recovery.

"We still expect a very good year and to grow in line with the market," GM's president and managing director Kevin Wale said.

GM expects total China car sales to rise about 16 percent in 2008, after climbing to 6.3 million in 2007. Most executives predicated the whole auto market, including trucks and buses, to reach 10 million units this year.

As big as the Chinese car market has become, just 44 out of every 1,000 people owns a vehicle, compared with an average 600 for the developed world and some 800 for the United States.

The number of vehicles on Chinese roads last year reached 47 million, parts maker Magna International said, a level equivalent to where the United States was in 1947.

"All the fundamentals are really, really good (for China to keep growing)," said Magna International Asia Pacific Executive Vice President Frank O'Brien.

Carlos Ghosn, chief executive officer of Nissan Motor Co (7201.T) and Renault SA (RENA.PA), agreed.

"If China is going to become the world's second-biggest economy -- if not the biggest -- you can expect the (per capita sales) number to reach at least 600," he told reporters at the auto show.

"You can imagine the growth prospects."

MORE CAPACITY

Banking on those prospects, Ford Motor Co (F.N) is considering building a third assembly plant in China to meet fast-growing demand just five years after entering the market, while Volkswagen's chief executive said he expects the German company to sell at least 1 million vehicles in China this year.

Luxury brands such as Germany's BMW (BMWG.DE) and Daimler's (DAIGn.DE) Mercedes division are also eyeing China's growing elite to boost global demand for top-end vehicles.