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Automakers Unveil China-Focused Models in Beijing

By Didi Tang and Joe McDonald

BEIJING -- At a Beijing auto show, Ford Motor (F - Get Report) on Sunday unveiled an Escort sedan designed in China for global sale, highlighting the growing influence of Chinese tastes on the industry.

Automakers are looking to China's biggest auto show this year to help boost sales in this huge but cooling market. Total sales last year reached 17.9 million vehicles, but growth is expected to slow from 15.7% to as low as 8%, even as newcomers including Lincoln and Tesla (TSLA - Get Report) enter the market.

The new Escort, a compact sedan with a 1.4-liter, four-cylinder engine, was designed at Ford's development center in China with features to appeal to local tastes. They include a bigger back seat for children and grandparents, lighter colors and cup holders made to fit iced tea bottles.

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The Escort goes on sale in China this year, expanding later to other markets, said CEO Alan Mulally.

"I think it will sell around the world," Mulally said. "But the real focus was led by the Chinese and what they wanted."

Ford joins a trend, led by brands such as General Motors' (GM) Cadillac unit, to make models sold globally that include features intended to appeal to Chinese tastes. Other manufacturers, such as Daimler Benz AG's Mercedes Benz, are breaking from the industry trend of selling the same vehicles everywhere and are reworking models for sale in China with added back seat room and other features.

That is squeezing ambitious but inexperienced Chinese independent brands. Their first-quarter sales shrank 2.6% from a year earlier, while the overall market grew 7.9%.

Also this weekend, GM debuted a new version of the Chevrolet Cruze and displayed its Trax SUV, targeting China's booming sport utility market. Chinese SUV maker Great Wall Motors unveiled its latest model, the Haval 8.

China's annual auto shows, held in Beijing and Shanghai in alternating years, have grown into some of the industry's most important commercial events.

Relatively strong Chinese sales helped to support the global industry, while the United States and Europe slumped following the 2008 financial crisis.

GM, with its Chinese joint venture partners, is in the midst of an $11 billion investment campaign to expand production.

GM president David Amman said the company will open three factories this year and two more next year. He said that is expected to raise production capacity to 5 million units.

Amman said GM expects to double sales of Cadillac luxury cars next year to 100,000 vehicles.

"We are moving full speed to keep up with it," Amman said. "We count on China for another record year in 2014."

Foreign brands are still piling into China, adding to already intense competition.

Last week, Ford launched its luxury Lincoln brand in the country. Lincoln says it plans to woo younger buyers with a service to allow them to make customized versions of any of its models.

On Saturday, Fiat SpA and its Chrysler Group LLC arm announced that their Jeep brand would begin manufacturing in China next year with Fiat's local partner, Guangzhou Automobile Group. That will allow Jeep to avoid steep import taxes.

At the auto show, Jeep displayed its Renegade model, aimed at China's booming market for sport utility vehicles. Jeep CEO Mike Manley said the company plans to add about 50 dealerships this year to a network of about 250.

"It's clearly going to be the biggest market for SUVs in the world. And the good news is, that's all we do," Manley said. "China is going to continue to grow even if it may slow down in the short term."

Automakers in China face challenges that include curbs imposed by Beijing, Shanghai and other cities on the number of new registrations they allow. This is an effort to reduce eye-searing smog. These curbs have prompted manufacturers to shift emphasis to smaller cities and the countryside, promoting smaller and lower-cost vehicles.

"We will see more cities with restrictive regulations," said Dietmar Voggentreiter, president of Audi China. "This we are reflecting in our planning."

Luxury manufacturers also are expanding their range to include more small vehicles for younger, well-heeled buyers.

On Sunday, Mercedes unveiled an extended version of its smaller C-series sedan.

"The new model is sure to be one of our growth drivers in China," said Hubertus Troska, chairman and CEO of Daimler Greater China.

Other global automakers also showed vehicles that highlighted consumer demand as well as the role of creative talent at their design centers in China.

Nissan Motor debuted a concept sedan, the Lannia, created by the Chinese staff of its Beijing design center. The company says China is a major element in its global turnaround plan.

"We're open to using Chinese people to design and shape the future of our cars, not just for China but for the world," said the company's chief planning officer, Andy Palmer.

Copyright 2014 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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