Auto Shanghai 2019: Cloudy with a chance of sunshine

Auto Shanghai 2019, or the 18th Shanghai International Automobile Industry Exhibition, is just around the corner.

The biennial show that falls on each odd year, like its [sibling" show Auto China in Beijing on even years, is by far the largest in the world no matter how you measure it.

According to show organizers, more than 1,000 companies from 20 countries and regions are expected to exhibit on over 360,000 square meters of floor space filling up all 12 halls at the National Exhibition & Convention Center in Shanghai.

Expect hundreds of global debuts, thousands of cars and SUVs to be displayed and more than a million visitors to come to the show, if the previous edition in 2017 is any indication -- 1.01 million visitors came that year.

It will also be the most dizzying show, thanks to the sheer size of the venue and its flower-shaped layout. And yes, all the halls have two floors of exhibition space.

Prepare to be dazed and confused. Even after all these years of attending the show, I still haven't figured out my way around.

The decline of total vehicles sales happens to be the current state of the Chinese auto industry as well: automakers are trying to navigate their way around a major "hiccup" never seen in its history.

Traffic flow at night in Beijing. /VCG Photo

Auto sales have fallen for nine consecutive months (March sales fell 5.18 percent, while Q1 sales saw a year-on-year decrease of 11.32 percent) since last July, as annual sales in 2018 fell for the first time in 28 years. They could fall again 2019, according to some estimates.

Auto Shanghai 2019, therefore, will kick off under this major backdrop overshadowing the largest industry party of the year.

But the sales slowdown is not the only backdrop adding uncertainty into the market. As the country has just announced a huge cut on new energy vehicle subsidies for 2019, rumors and discussions on what foreign automakers might do as far as raising their stakes in vehicle joint ventures is concerned (BMW has already done it and Volkswagen is rumored to take majority ownership of one of its JVs) are picking up steam now that the 50:50 equity requirement has been lifted, and pressure is mounting on automakers to meet the tough corporate average fuel consumption targets and NEV credit policy that will go into effect this year requiring NEVs to generate enough points as a certain percentage of vehicles sold.

The good news is, a major [rescue" measure, announced right before the Chinese New Year, as well as the recent reduction of manufacturing VAT tax from 16 to 13 percent, which has resulted in a [price war," are in place to boost consumption.

Auto Shanghai 2019 will thus be held during the most complex market environment in recent memory. The party, however, must go on.

What's being served up? The show will pit the traditional foreign automakers, traditional Chinese automakers and the Chinese smart EV startups, what I call the [three forces," against each other more than ever.

Volkswagen's I.D., an autonomous self-driving concept vehicle, is displayed at the Consumer Electronics Show 2017 in Las Vegas, Nevada, U.S., January 5, 2017. /VCG Photo

So there are at least three things to look forward to at Auto Shanghai 2019.

First, foreign automakers will finally bring their NEV offensive to the show with the debut of numerous locally-produced NEV models, especially from big brands like Volkswagen. Remember, China's NEV market up until now has been dominated by the traditional Chinese brands.

In addition, the Chinese traditional automakers will take it up a notch with debut of more futuristic concepts and upper-scale production models, including quite a few [Tesla killers." Those that are at the front of the pack like Geely, Great Wall and BYD will widen the gap with second-tier brands and the also-rans in terms of styling and build quality that will even outshine the established foreign counterparts.

Moreover, Chinese smart EV startups are rushing to debut their second or even third vehicles in concept form, despite the fact that some of them haven't even launched their first vehicle to market yet. Then we shouldn't forget the tier-1 suppliers. Close to half of the top 100 global tier-1 suppliers are expected to exhibit, taking up top floors of two halls.

Many of these suppliers, who nowadays like to call themselves technology companies, have their China or Asia Pacific headquarters based in Shanghai so it's basically home court advantage, hence the turnout (relative to Beijing).

Quite a few suppliers will have their global CEOs on hand to personally talk about China's new role in terms of developing technologies here for global applications, rather than the other way as used to be the case. They are also banking on content growth despite the volume slowdown, as vehicles get smarter and more electrified.

Last but not least, look for the smaller Chinese startups in the autonomous driving tech space in a special [future mobility" exhibition zone in Hall 3H. It will be like a mini CES.

Chinese automaker Geely unveils the first model of its new Lynk & Co brand in Berlin, Germany, October 20, 2016. /VCG Photo

As has been the case in recent years, to avoid the noise on press days, many of the [three forces" will be holding their brand nights a day, or two, or three in advance of the first press day on April 16. Heck, Ford debuted its all-new Escape at an event on April 3, almost two weeks earlier.

Half of the show will be over by the first press day and most of it will be over by noon that day (there will be a total of 136 press conferences on April 16-17), at least from a media perspective, as automakers jostle for headlines.

Crazy party in crazy times. Auto Shanghai 2019 at least provides automakers a break from the uncertainty blanketing the industry, with the expectation that the market in the second half of the year will rebound.

Sunshine seems to be peering through the cloud. Will the weather turn sunny or more rainy? I guess that will depend on the effectiveness of the stimulus policies and automaker's ability to entice Chinese consumers to buy.

What will be certain is that competition will only get fiercer and winners and losers decided faster, which is a good thing for the industry.