China is rapidly becoming the world’s largest market for luxury cars. This is the conclusion of a study by the respected Institut für Automobilwirtschaft (IFA) of the university of Nürtingen-Geislingen, near Stuttgart. The study was made in cooperation with the likewise renowned Anting Automotive Academy of the Tongji University in Shanghai.

The study predicts that by 2015 two million premium cars will be sold in the PRC. That is four times the current uptake of luxury cars. In 2009, Chinese bought 500.000 cars for the upper class.

End of last year, we reported that the Chinese government was publicly thinking about new regulations to shift a large chunk of cars bought by the government to home-grown brands. We are talking about a serious amount of money here. The government is the biggest customer of cars in China, with an annual budget of around $15b. Government purchases influence the whole market. To buy Chinese.

Like it or not, more and more car makers elect to premiere their newest creations not at the IAA in Frankfurt, or the Detroit Auto Show, but in China. What do you expect with China being the world’s largest car market, and growing like gangbusters. TTAC will cover the Beijing Auto Show on press days of April 23 and 24. With daily posts, helped by the fact that China is not only ahead in sales, it’s also 12 hours ahead of the East Coast.

Here is a short random preview, gleaned from various posts on Chinese websites.

It seems like the Chinese government is getting worried a bit about what Greenspan would have called „irrational exuberance“ in the Chinese auto market. If Greenspan would have worked for the Chinese. Would have been interesting. Anyway …

As my revered colleagues at China Car Times rightly remark, “March is the first full month of car sales after the Chinese New Year where the majority of dealerships are closed for around two weeks, thus stunting growth of that month, but March is always a very busy month with many customers flush with cash after the New Year.” That’s why everybody who knows the Chinese car industry has a sharp eye on the March numbers. And that’s why everybody gasped when total vehicle sales in China climbed 55.79 percent from March a year earlier. Something else happened. A revolution.

Western auto makers in distress are in the cross-hairs of Chinese auto makers that are riding one of the largest car booms in history. When Geely closed its deal with Ford over Volvo, we wrote: “Government owned companies like FAW, SAIC, Dongfeng, or BAIC will watch closely how privately owned Geely will digest the Volvo purchase. If successful, western car companies will be on their shopping list again.” They already are.

Our oracle of Shanghai, Kevin Wale, president and managing director for GM’s China operations, is chickening out. “Anything is possible in China. We are very bullish about future potential here,” he said. And then he predicted that GM China will sell 2m vehicles this year, China Daily reports. Why is that chickening out, you ask?

Japan’s Ministry of Economy, Trade and Industry is electrified. They think, next-generation automobiles will make up as much as half of the new passenger cars sold in Japan in 2020, says The Nikkei [sub].

By 2020, the ministry aims to have 2 million household chargers for electric vehicles installed, along with 5,000 fast-charging stations for commercial fleets. The ministry promotes joint development of infrastructure projects between the government, industry and academia to help pave the way for Japan to become the world’s most electrified nation.

People who make cars for a living have a more conservative outlook. Privately, they think the ministry should lay off the sake.

Free market economics are a simple process. Or so they say. Dive in, and whoever survives, survives. Let the market decide. According to the pure tenets of free market economics, it’s important that the government shows no favoritism. Yeah, right.

The Korea Times reports that President Lee Myung-Bak is showing more than just interest in Hyundai-Kia.

Guess who was matchmaker for Daimler’s three-way tie-up with Renault and Nissan? The Nikkei [sub] thinks it was Volkswagen. VW’s alliance with Suzuki “spooks Daimler into thinking small,” says the Tokyo business paper. And that’s quite a change for formerly bigthinking Daimler.

The Chinese government has been getting serious about controlling the emission and consumption of its rapidly growing fleet. Local manufacturers such as BYD and foreign joint venture partners are quick to rise to the occasion. Toyota’s Chinese joint venture with Guangzhou Automobile launched today a hybrid version of the Camry. The Camry is well liked in China, more than half a million of the non-hybrid version have been sold in China between its launch there in June 2006 and the end of February 2010. The hybrid Camry Hybrid won’t come cheap.

Friday’s announcement of mindblowing Chinese sales numbers must have had an effect on the minds of the reporting profession, as evidenced by a quick read of the news. They are all over the landscape.

Toyota is still smarting from a heavy decking it has received from Congress, the NHTSA, lawyers, and the press. Toyota’s answer? Let’s get SMART!

No big deal in China is done until it’s signed and sealed – by the Chinese government. In the case of Volvo, there won’t be any Hummeresque killing me softly. Geely’s deal to buy Volvo from Ford, reached last month, will be waved through the (necessary) approval process.

China’s SAIC is basking in the glow of another bang-up quarter. China’s biggest automaker told Reuters that their first-quarter net profit rose more than four times from the year-ago result. Detailed numbers will be released with SAIC’s full first-quarter earnings report on April 28. Keep in mind that last year’s results already were 9 times those of 2008. In March, SAIC sold 336,387 units, sales for the first quarter were up 64 percent from a year earlier to 891,795 units. To put it into perspective: All of Germany sold 670,410 cars in the first three months of 2010. SAIC singlehandedly outsold Germany by 221,385 units.

Yesterday, we admitted to the sin of a faulty prognosis: More than a week ago, we had forecasted a March growth rate between 50 and 60 percent for the Chinese auto market. Yesterday, the number came in as 63 percent. Shame on us. However, yesterday’s number was passenger vehicles only. Our patent-pending forecasting model covers all cars. Now, the real number is in.

China’s carmakers better get their pure plug-ins ready. The central government is set to spend serious money to electrify development and sales. China Daily reports that “a much-awaited government stimulus plan” is ready for government approval and should be in effect in the next couple of months.

Private buyers in five chosen cities (so far unveiled, but the usual suspects apply) will be able to collect close to $9000 if they buy a pure plug-in. Imports need not apply.

A week ago, we swam against the trend of China analysts who predicted a 30-40 percent rise in March new car sales in the Middle Kingdom. By using our patent-pending TTAC forecasting methodology, we projected China’s sales rising between 50 and 60 percent in March. The numbers are in. We were wrong.

During the courtship stage between Geely and Volvo, and after their recent nuptials in Gothenburg, Sweden, we often raised the matter of Chang’an. Chang’an has had a joint venture with Ford since 2001. Under the JV, they also make Volvos in China, the S40 and S80, to be exact. They don’t make them in large numbers. 22,405 Volvos were sold in China last year, up nearly 80 percent compared to 2008. The S40 has been on the Chinese market since 2006. The S80L, a long version of the S80, was introduced last year. Chang’an had been in play as a suitor for Volvo, but bowed out.

What will happen to Chang’an’s Volvos?

A while ago, we predicted that China’s March new car sales might exceed expectations. We came to that conclusion by reading the usually reliable tea-leaves of the March GM sales. They came in at 68 percent above March 2009. Using them as an indicator, growth of overall March sales in China could be in the 50 to 60 percent range. Analysts polled by Reuters think the number will be 30 – 40 percent. It looks like they are wrong.

Last evening, U.S. Transportation Secretary Ray LaHood declared he’d be seeking the maximum penalty from Toyota. That’s $16.4m, because “they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.” That’s the largest civil penalty the U.S. Department of Transportation has ever sought. According to Reuters, “previously, the largest fine was $1 million against General Motors Co for failing to promptly recall windshield wipers in 2002-2003 model vehicles.” One would think Toyota can pay that out of petty cash. But the matter has Toyota concerned. Plaintiff lawyers are rubbing their hands.

From the unintended consequences dept. comes yet another humdinger. Some keep saying the recent Toyota spat was intended to put the Japanese competition in its place. Instead, it ups the competitiveness of Korean and Chinese auto makers, says The Nikkei [sub].

Now that TTAC’s crew has landed in force at NYIAS, Chinese Week-end is no longer in effect. Regular rules apply. We clear the stage with a look back at the human side of last year’s Shanghai Auto Show. There are two reasons for it:

The NY Auto Show? Let’s talk about what is not there: The star of the Geneva Auto Show, the gas-electric hybrid Porsche 918 Spyder Concept. It is not there because it’s, as Motortrend reports, “en route to the Beijing Auto Show.”

As you are reading this, worker bees in the employ of Volkswagen are putting the last touches on a revamped model of the venerable Phaeton, overtime be damned. When everything is in Ordnung and the Spaltmass (panel gap) is as tight as a vise, the Phaeton will be loaded on the next Lufthansa freighter, and – eat your heart out, Jack Baruth – it will be flown to Beijing. As China Daily has it, “Volkswagen AG is speeding up a face-lift of the $88,000 Phaeton sedan in time to unveil the model at the Beijing auto show and target China’s millionaires.”

A few days ago, we reported that Toyota had caved in to demands of the Commerce Bureau and the Consumer Protection Committee of China’s Zhejiang Province. Under the agreement, Toyota will reimburse Zhejiang customers for losses sustained from the RAV4 recall. Toyota will send people to pick up and deliver the affected vehicles, and will provide a loaner while the car is in the shop. The whole thing was started by New York’s AG Andrew Cuomo who strong-armed Toyota into supplying similar services to recall-affected residents of the Empire State. The Zhejiang-accord had The Nikkei [sub] worried: “Such an agreement could lead to demands for similar deals from customers in not only other provinces, but also other countries.” It didn’t take long.

When you are a Chinese car company, especially one that is mostly government owned, reporting profits is not one of your prime objectives. As long as you don’t lose money hand over fist, as long as you provide jobs for many people, as long as you grow in market share and influence, having money left over is sometimes just a (taxable) nuisance. But in times like these, it’s unavoidable. And it doesn’t hurt your stock when you are a publicly traded company. Shanghai Automotive Industry Corporation, better known as SAIC, has announced that their net profit for 2009 jumped 900 percent from the previous year, reaching a record of nearly $1b ($966m, to be exact.)

Suzuki is saying sayonara to plans of hybrid and V6 equipped versions of their new Kizashi sedan. It’s not that they are against those mills. They just don’t like the company that makes them. That company is GM.

Yesterday, Chinese site auto.sina.com had what our Ed Niedermeyer called “a belly-laugher of a wild-ass rumor: they say BYD has its eye on Daimler’s zombie luxury brand Maybach.” Funny as it may be, media all over the world jumped on the story. Now, the story is heading right to Snopes. After what must have been a round of heated phone calls between Stuttgart and Shenzhen, Daimler denounced the dumb-ass tale:

A few weeks ago, we reported that the commerce bureau and consumer protection committee of China’s Zhejiang Province’s called on Toyota to compensate drivers for costs stemming from its recall of the RAV4. The bureau wanted that Toyota supplies loaner cars while the RAV4 is in the shop (Toyota says the reflash takes 30 minutes.) The Chinese also suggested that Toyota compensates drivers for gasoline and other expenses involved in bringing cars back to dealerships. At the time, Toyota had a polite “no thanks,” for the request. Now, Toyota changed their minds. They will pay.

There is a new Japanese bride on the Match.com equivalent of the international auto business. It’s Mazda. Despite pronouncements that Mazda’s “strategic alliance with Ford will remain unshaken” (as uttered at a Monday press conference by Mazda Executive VP Masaharu Yamaki,) everybody who knows the business knows: The bloom is off the rose between Mazda and Ford. What’s more, Mazda is on the prowl to do some nampa with another potent partner. Who will it be?

If you, dear reader, had expected (or, perish the thought, hoped) that SUA hype and rapid fire recalls would bring Toyota down, then stop reading immediately. What follows will not be good for your circulatory system.

I’m running out of gratuitous tie-up pictures, so let’s celebrate the good news with a video: The Nikkei [sub] sends us the news that Nissan and Daimler “are in the final stages of negotiations to obtain stakes of less than 5 percent in each other.” This comes on the heels of yesterday’s news that Daimler and Renault will exchange shares. With Nissan joining the couple, the tripartite axis will be perfect. No Italians this time.

After long hand-holding and necking, Daimler and Renault finally seem to progress to third base. The Financial Times reports that the French and the Germans “are in the final stages of wide-ranging strategic partnership talks that would involve the German and French car makers taking ‘symbolic’ minority stakes in each other.”

When we wrote yesterday that GM’s „car of the future,“ to be shown at the upcoming Shanghai Expo, “looks more like an overgrown Segway scooter,” we meant it in jest. Turns out they are serious. It IS an overgrown Segway scooter.

Malaysia is an economic boom-town, and a country of 28m people. Import duties on foreign cars can run as high as 300 percent. According to unconfirmed rumors, this is to protect the two local makers, Proton & Perodua.

Many foreign car makers have tried to get a chunk of that protected market. One of them is Volkswagen, which does a booming business next door in China.

A week ago, we ran a story about China’s BYD scaling back – way back – plans to mass produce their E6 pure plug-in. We reported that all they’ll make will be 100 E6 electric cars to be used as taxis in the city of Shenzhen, where BYD is based. Further development of the vehicles will depend on how that test fleet will be doing. At the time, it was only a rumor. Now, the rumor has been confirmed by the BYD man himself, Chairman Wang Chuanfu.

Despite having their hands full with recalls, class action suits, Prius hoaxers and gold diggers, Toyota is not falling into deep depression. To the contrary, they think demand in 2010 will be higher than originally planned. And they ramp up their production to meet the demand.

Japan’s auto industry is slowly putting its toes back into the Iraqi quicksand. Their stalking horse is Sumitomo, which established the first office of a Japanese company in Iraq since the U.S.-led invasion of 2003, The Nikkei [sub] reports. The office is in the business center at Baghdad’s international airport, surrounded by American military facilities. They’ll build the world’s most heavily guarded workshop.

“If we lose that case, we will lose heavily” said Toyota in Delhi’s High Court. The judges had no sympathy for Toyota’s pleadings. Their decision might impact seriously on Toyota’s plans to market the Prius in 40 countries worldwide. As if Toyota doesn’t have enough problems with recalls and class action suits, now this:

This morning, Beijing woke up in a massive yellow cloud. Motorists found their cars covered by thick layers of yellow grit. Air filters were quickly overwhelmed. What happened?

Time to break out the (tasteful) shibari pictures. “Nissan would seriously consider joining a comprehensive tie-up between Renault S.A. and Daimler AG if the alliance they are discussing happens,” says The Nikkei [sub]. With Renault and Nissan tied-up both at the hips and on top, such a move would make more than just sense.

From Jim Sikes (he only wants a new car), and Orange County ( no idea what they really want), to class action lawyers (they want billions), everybody wants to cash in on Toyota. Chinese Zhejiang Province’s doesn’t want to stand behind. Their commerce bureau and consumer protection committee called on Toyota to compensate drivers for costs stemming from its recall of faulty vehicles, reports The Nikkei [sub].

Toyota sales back home in Japan have yet to show a sign of suffering ( they were up 49.9 percent in February while the Japanese market rose 35.1 percent.) However, Toyota’s reputation is taking a hit in the Land of the Rising Sun, says The Nikkei [sub]. Depends on how you look at it: 40 percent of Japanese consumers in a recent survey said Toyota’s troubles have undermined their confidence. 58.4 percent said the issues have not changed their opinion of Toyota, 1.4 percent said they now hold the firm in higher regard.

Over the daily Toyota runaway stories, it’s easy to forget the plight of GM and its children abroad. If you think that’s the idea, then you are a miserable conspiracy theorist, and you should stand in the corner. With that in mind, let’s check in with GM and its worldwide siblings to see how they are doing.

All kinds of strange news are coming from GM’s Korean foster child Daewoo. Two days ago, Daewoo CEO Mike Arcamone announced: “In 2010, GM Daewoo will be profitable. That is my target.” That didn’t get much traction. Reporters wanted to know how bad last year’s numbers were. Arcamone remained tight-lipped. He admitted red ink for 2009, how much remains anybody’s guess. In 2008, it was $773m worth of red. Last October Daewoo-is-me had to be bailed out by the bailed-out GM to the tune of $413m. Arcamone has some soothing news: “We currently do not seek any other financial support from our creditors.” The operative word is “currently.” There is one way to stop the hemorrhage for good: Pack it in.

Volkswagen and its freshly hitched 20 percent bride Suzuki will have a sit-down next week to “flesh out their joint projects by welding together a number of ideas,” reports The Nikkei [sub] from an earnings briefing in Wolfsburg.

The Nikkei guesses that Volkswagen will provide hybrid and electric-vehicle technologies to Suzuki. In turn they are interested in know-how on manufacturing subcompacts at low cost. As far as distribution goes, the two will most likely compare notes on China, where VW is strong, and on India, where Suzuki rules the roost.

Japan’s Automobile Manufacturers Association said “hai, wakatta” (yes, we understand) to their government, and promised to “actively support the creation of an international mutual-recognition framework for passenger cars,” reports The Nikkei [sub].

Turns out, the Japanese government is behind the idea to agree on an International Whole Car Type Approval. The idea had been floated in Geneva, and received widespread agreement. No wonder: The Europeans are intimately familiar with the concept, due to their European Community Whole Vehicle Type Approval (ECWVTA). And the Americans aren’t part of the party. They are doing their own FMVSS thing.

India is going to be an economic powerhouse, just like China. With 1.1 billion people, that’s a lot of potential customers for your goods. Suzuki knew this, which is why they pushed hard in India. Suzuki is the undisputed market leader in India. Whenever there are developments in that market, we should probably listen. Listen up:

Uh-oh. Daimler must be needing money really bad. Reuters has on their wire that Daimler is trying to sell their complete 5.34 percent share in Tata Motors for cheap. They are offering the package at a discount of 4 to 7 percent below the stock’s Monday close, and hope to raise $429 million.

The Japanese government floated a highly interesting idea in Geneva. It could possibly revolutionize international car trade. Except for the United States. According to today’s Nikkei [sub], the Japanese government has proposed that the World Forum for Harmonization of Vehicle Regulations, a working party of the United Nations Economic Commission for Europe, create a system for international whole vehicle type approval. The UNECE immediately began looking into the idea last Saturday, and as per the Nikkei, by Saturday evening, “a majority of the member countries had agreed to the proposal.” That was fast.

It did not need much work: An international mutual recognition framework already exists for automobile components. The USA and Canada are absent from this framework. Says the Nikkei: “But for vehicles themselves, automakers have to obtain for each model approval from their own government as well as the governments of the countries to which they export.” Well, not exactly.

According to popular wisdom, the Koreans have no love lost for the Japanese. And likewise. What’s more, Koreans and Japanese car makers are bitter competitors for foreign market share. So wouldn’t it stand to reason that Korea would jump on the “down with Toyota” bandwagon with their 96 million feet? Just the opposite is true.

The Chosun Iibo, according to Wikipedia “one of the major newspapers in South Korea,” takes the position that Toyota could very well be “a scapegoat for U.S.-Japan squabbling.”

While Toyota is trying to convince the American public that they’re as American as losing at hockey Wal-Mart, Hyundai is pulling the same stunt over at the other side of the pond. Forbes reports that Hyundai wants to become a card carrying member of the European Automobile Manufacturers’ Association (ACEA).

Renault is using their Dacia subsidiary to produce cheap cars for Eastern Europe and other emerging markets (such as Germany, where Dacias had been snapped up during the Abwrackprämien-orgy.) Meanwhile, Renault’s Japanese twin Nissan is starting to feel a little left out. Yes, they have the Nissan Pixo, which is a rebadge of the Suzuki A-Star, which is built in India (and was recalled recently), but Nissan seems to want something of their own and they want the Indian truck manufacturer Ashok Leyland to help. Sounds easy enough …

Everybody who’s ever worked in China knows that some things take some time. Nothing that is announced today, happens tomorrow. There are applications to be made, documents to be “chopped.” Sometimes, this process takes forever, as it seems to be the case with Hummer. Sometimes, things move a bit faster. Last December, we reported that GM would sell a crucial one percent of the 50:50 holdings of GM China to their joint venture partner SAIC to bring the shareholdings to 51 percent SAIC, 49 percent GM.

As China’s new year (that of the tiger) came around, China’s biggest automaker SAIC Motor Corp has won regulatory approval to acquire the crucial 1 percent stake in Shanghai GM, Shanghai Daily reports today via Gasgoo. The matter has been officially filed to the Shanghai Stock Exchange yesterday. It’s official now. General Motors officially has been relegated to minority shareholder in its key venture in the world’s largest auto market. SAIC is now calling the shots.

If you were a company at time of recession, belt-tightening and countries on the verge of bankruptcy, you’d think that registering record profits and growing global market share at times like these would keep everyone at your company happy, right? Wrong. Members of Hyundai Motor’s union are angry. Livid. Up in arms. And as students of Asian cultures will confirm, Koreans can get, shall we say, a bit hot and bothered about causes close to their hearts.

Koreatimes reports that despite pleas from management for peaceful resolutions, their union has demanded that Hyundai stop expanding overseas and guarantee job security at home – or else.

While the world is trying to come to grips with pedal-gate, tiny Hong Kong is attempting an exorcism of its own gremlins: 18,000 (mostly Toyota Crown) taxis and 2,000 minibuses are propelled by LPG, liquefied petroleum gas. The gas is lugged around in a large tank housed in the trunk of the taxis, much to the chagrin of suitcase-schlepping tourists. The real problem is: The LPG mobiles are breaking down in wholesale fashion, China Daily reports. Hundreds a month.

The Hong Kong government set up a special task force to investigate. Nobody is blaming Toyota – this time.

Japanese car manufacturers, reeling from a doubly whammy at home (down 9.3 percent) and in the U.S.A. (down 21.2 percent) are looking increasingly to growth markets such as China (up 45 percent) and India (up 18.7 percent.) Large players like Nissan, Honda and Toyota in China, and Suzuki in India, have been there for years. Now there is a virtual stampede. A collection of news from today’s Nikkei [sub]:

The U.S.A. dispatches its Secretary of State to complain to Japan about less than 8000 vehicles exported from the U.S. not benefiting from the Japanese cash-o for clunker-u. At the same time, a new car market is starting to explode, without anybody noticing: Vietnam.

Vietnam imported 76,300 units in 2009, nearly 10 times the U.S. exports to Japan. The increase was 51 percent on the year, an all-time high, the Nikkei [sub] reports. Sales of domestically manufactured vehicles were 115,000 units in 2009, up only 3 percent, but still a record. A total market of some 200,000 units is not much compared to neighbor China, but it’s a strong start.