The 2006 Beijing International Automotive Exhibition opened on Sunday, displaying 572 cars and car parts from 1500 manufacturers in 20 countries and regions. About 26 percent of the cars on show were developed domestically.

The rapid development of the Chinese auto market has caught the attention of many multinational companies. In the first 10 months of this year, more than 5.7 million Chinese cars were sold, 20 percent more than the same period of last year. It's predicted that by the end of this year, a total of 7 million cars will have been manufactured, making China only second in size to the US as a manufacturer. American company Ford, although currently experiencing significant losses, has more than 52 models on display at the exhibition.

This year, home-grown brands have made their presence felt. The new Weizhi ant the Tianjin Auto booth is especially eye-catching. Annual production of this vehicle is set at 190,000 units. Dongfeng Motor has built a new kind of racing car and expects to sell 5000 of them. Chery car is unique because of its special combination of diesel and mix power. Chery has exported 50,000 cars.

A Chinese-designed electricity-powered vehicle has also been on display at the exhibition. The iron battery has a total life of 600,000 kilometers and the car can travel more than 300 kilometers per hours if fully charged. The iron cell is just as powerful as lithium battery but is safer.

Changan Corporation has produced a new brand Benben. The company has already received 400 orders for the vehicle after just three days.

Shanghai Automotive Industry Corp., Huachen and Dongfeng have all exhibited new models. In the first nine months of this year, China's home-grown cars have surpassed 26% of the total cars produced in China. Meanwhile, Sino-foreign joint venture car producers are trying to improve their research and development.

Multinational companies continue to come to China. With oil price hikes and higher environmental standards, multinational companies are trying to increase their advantages in environmental protection and energy-saving. Shanghai General Motors has exhibited ecological function car and fuel cell car. FAW Toyota is also exhibiting a fuel cell concept car.

The auto market is already very competitive; although many Chinese car makers are increasing production their profits are actually decreasing. Multinational companies are still coming to China to establish joint ventures.

This exhibition is the first in which luxury vehicles have featured as category. Many luxury cars are very expensive but there is a market for them. Many multinational companies are changing their focus to luxury cars.

More and more Chinese people are buying cars and now the after-sales service and financial service markets are expanding. In 2005, after-sales service area of the auto industry was valued at 120 billion yuan or 15 billion US dollars and is expected to grow to 200 billion yuan. Statistics from developed countries show the actual price of the car is only 25 percents of a driver's total expense. Currently, the ratio of cars to car parts being produced in China is 1 to 0.66, while internationally, it is 1 to 1.7. So there is plenty of room for growth and it is expected that there is a potential market of 800 billion yuan. Zhejiang Automobile Industry Association organized over 100 spare parts producers to participate in the exhibition in Beijing.

There is a lot of potential for the financial service market as 10 to 20 percent of Chinese car buyers take out loans to purchase a vehicle. If China reaches just half of the international lending rate, there is the potential to make 500 billion yuan.

This year, there are also dozens of media and website-design companies participating in the exhibition. They are marketing themselves to the car industry because buying a car online has become a trend. Surprisingly, China Auto's website received 25 million US dollars from the US and Yiche's "change cars" website received 10 million dollars of co-financing from the US and Japan.

The Beijing International Automobile Exhibition started in 1990 and it is held every two years.

By People's Daily Online