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Business

Carmakers flock to Shanghai despite slowing China sales

The Shanghai motor show is a must for global and domestic carmakers despite stalling sales growth in China. The SUV segment, in particular, is growing fast.

Global carmakers continue to invest heavily in China, the world's largest auto market since it overtook the US in 2009. They, along with domestic competitors, have gathered at "Auto Shanghai," which is fast becoming one of the most important trade shows for the industry.

Although China's economic growth is slowing, vehicle sales there still reached 23.5 million last year, far more than in the US.

"The market will increase less than in former years, but still much higher than in any other relevant automotive market in the world," President and CEO of Volkswagen Group China, Jochem Heizmann, told reporters on the eve of the show.

China's economy expanded just

7.4 percent last year

, the slowest in nearly 25 years. Annual car sales growth halved to 6.9 percent last year from 13.9 percent in 2013, according to the China Association of Automobile Manufacturers (CAAM).

Autosalon Shanghai 2015

BMW's X5 xDrive 40e

SUV 'feeding frenzy'

While the higher-priced and the luxury segments are suffering due to the economic slowdown, sales of SUVs are soaring, making up 26 percent of all passenger vehicles sold in the first quarter - the highest proportion of any major market.

"By 2018, China is expected to be the biggest market in the world for SUVs," John Lawler, Chairman and CEO of Ford Motor China, told a news conference on Monday.

"We predict that this year will be an SUV feeding frenzy," said Ola Kallenius, head of marketing for Mercedes Benz, which unveiled an SUV Coupe concept on Sunday.

Domestic makes benefit from the trend, too. SUV maker Great Wall Motor and Geely Holding, owner of Sweden's Volvo Cars, reported first-quarter sales gains of up to 70 percent.

Despite China's slowdown, global carmakers continue to invest heavily in the country, with Volkswagen, GM, Toyota and Ford all pursuing expansion plans.

"It's still one of the markets with the highest growth in the world so we're not disappointed in this," Carlos Ghosn, CEO of both Nissan Motor and Renault, said in Shanghai on Monday. "We are investing in China and we are going to continue investing in China."

China accounted for more than half the total industry spending on new or expanded capacity last year, with plant investments worth $12.7 billion (11.8 billiion euros), according to an annual Canadian study of automakers' outlays.

This year's "Auto Shanghai" opens on April 22 and runs until April 29, 2015.

ng/hg (Reuters, AFP, AP)

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