• by Fara Warner , January 16, 2007

China's unmistakable influence on the global auto industry is extending far beyond its role as a manufacturer of cheap auto parts.

The country surged past Japan to become the world's second-largest automobile market behind the U.S. in 2006, according to the China Auto Association of Automobile Manufacturers. Total vehicle sales--including trucks and buses--hit 7.2 million in China, compared to 5.7 million units in Japan.

China still has a long distance to go before it usurps the U.S. as the world's biggest auto market. More than 16 million cars were sold in the U.S. last year, according to Autodata Corp. of Woodcliff Lake, N.J.

At this year's North American International Auto Show, Chinese automaker Changfeng showed off a version of a sport-utility vehicle it hopes to bring to the U.S. in the next few years. In 2005, another Chinese automaker, Geely, unveiled a small car at the Detroit show that it planned to bring to the U.S. by the end of the decade.

DaimlerChrysler AG signed a deal late last year with China's largest local automaker Chery to build subcompacts for the U.S. market.

Even before the Detroit auto show was wrapping up, auto executives were talking about the Shanghai Auto Show in April as if it were equally--if not more--important than Detroit's event, which celebrated its 100th anniversary this year.

Shanghai's show has been around since 1985. BMW director of design Adrian Von Hoydonk said the luxury brand has major plans for the Shanghai show. General Motors' executives also were looking forward to making a big splash in Shanghai.

GM has made no secret of how important it considers the Chinese market--both in terms of sales and influence beyond its borders. GM is now China's No. 1-selling international automaker, posting sales of more than 800,000 cars and trucks in 2006.

The company's design and engineering center in Shanghai, the Pan Asian Technical Automotive Center or PATAC, has taken the lead on redesigning Buicks for the Chinese market. Those redesigns, particularly of the Lacrosse, have made Buick a more prestigious and stylish brand in China.