Nissan debuts new Chinese car model

SHANGHAI (AP) – Nissan unveiled a midsize sedan designed for China on Monday at a Shanghai Auto Show that highlighted the commercial resurgence of lower-priced Chinese auto brands.

Nissan Motor Co. unveiled the Lannia, a midsize sedan designed for Chinese buyers. The company, which has made China a pillar of its global turnaround strategy, calls the Lannia its first offering for the country's "youth generation."

For the SUV market, Nissan announced its Murano hybrid. GM, Ford, BMW, Ford's Lincoln luxury brand and other automakers also displayed SUVs, many of them offering hybrid-electric versions.

Building on Nissan's longstanding success in the sedan market, it's the first product developed and designed for young Chinese generations, especially those in their 20s and 30s, seen as the nation's trendsetters.

"Edging forward is not enough. The market in China is moving very fast, especially with the post-1980s generation," said Titus Liu, Creative Design manager at Nissan Design China. "They do not want to stick with the status quo, so we are dedicated to finding the next great breakthrough. This is important for us."

Design and development was led by Nissan Design China, backed by the Nissan Global Design Center.

Competition in China is intensifying as economic growth slows and more manufacturers pile into the world's biggest auto market by number of vehicles sold. Global automakers are spending heavily to appeal to Chinese tastes and local brands are rolling out lower-cost versions of SUVs and other popular vehicles.

This year's show highlights renewed strength for Chinese automakers following two tough years spent losing market share to foreign rivals. Local competitors have spent heavily to roll out new models.

Brands including SUV producer Great Wall Motor and Geely Holding, owner of Sweden's Volvo Cars, reported first-quarter sales gains of up to 70 percent. That helped to boost the market share of Chinese automakers so far this year to 43 percent from last year's 38 percent, according to LMC Automotive.

For some global brands including Volkswagen AG, sales were flat or even declined due to their emphasis on higher-priced vehicles with growth in low to mid-single digits. That was a sobering development for automakers that are counting on China to drive future revenue.

SUVs, popular with Chinese drivers who value their image of safety in the country's chaotic traffic, accounted for 26 percent of all passenger vehicles sold in the first quarter, the highest proportion of any major market.

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

The abrupt deceleration in China's economic growth has dragged down auto sales growth and prompted buyers to shift to lower-priced models.

Growth slowed to 7 percent in the first three months of this year, its lowest quarterly expansion since the aftermath of the 2008 global crisis. That still is higher than the low single-digit growth forecast for the United States and Europe this year, but well below China's peak of 14.2 percent in 2007.

Auto sales growth slowed to 9 percent in the first quarter of this year, down sharply from 2009's peak above 40 percent. Growth is forecast to cool further this year to 7 or 8 percent and to level off at about 5 percent in coming years.

The deceleration to what Chinese leaders term the "new normal" of slower but more sustainable economic growth has cooled corporate profits and the real estate industry. The ruling Communist Party is pressing companies to boost wages in an effort to promote growth driven by consumer spending instead of trade and investment.