Autocar Why China's automotive market won't stop growing

Discussion in 'News Feeds' started by Autocar, Wednesday 1st May, 2013.

  1. Autocar Valued Contributor ★ ★ ★ ☆ ☆

    Car sales in China are expected to hit 30 million a year in the next decade - and they'll include plenty of domestic talent Rapid expansion of the Chinese car market is already a cliche, yet if latest estimates are anything to go by, it has hardly begun.
    According to Mathieu Vennin, one of PSA’s principal experts on the Chinese market, in 10 years’ time world demand for cars will have passed 90 million a year (currently it’s 58 million), propelled mainly by rising demand in South America and Asia, with the rapacious Chinese market taking pole position.
    No wonder, he says, that car makers are rapidly adapting their products to this new generation of Chinese first-time buyers, many of whom have only just learned to drive.
    China’s demand for cars in 2012 was 12.7 million units. This year it should reach 15 million, in a country where 92 per cent of the population still don’t own cars. Vennin estimates that on a conservative expansion of 7.5 per cent per year, over the next 10 years China will reach a staggering 30 million units, and even then less than 20 per cent of Chinese people will own cars. Today’s ownership figure for Europe is 50 per cent; in the US it’s 80 per cent.
    Mostly, new Chinese cars are C-segment four-door saloons; hatchbacks account for only five per cent of the market. Overwhelmingly, the cars are petrol-powered automatics; Chinese drivers prefer not to learn the intricacies of operating manual gearboxes.
    The government also accepts the argument that diesels create a problem of atmospheric particulates. Diesel is only used in bulk by HGVs. Curbs in registrations in the biggest cities are not denting the expansion of car demand, which is just starting in earnest in the less industrialised west of China.
    At present, buyers respond in bulk to the desirability of European cars. VW is China’s biggest car seller, taking 17 per cent of the market. Hyundai and Kia, growing rapidly, control well over 10 per cent, and even Buick has six per cent.
    Japanese makers have been strong — led by Toyota, Nissan and Honda — but are declining disastrously at 15-20 per cent a year following a local territorial dispute between China and Japan. Chinese people are both patriotic and political, and are withdrawing their business with amazing speed from the car makers of a country widely seen as an antagonist.
    Declining Japanese demand isn’t being replaced by a move into home-grown cars, however. The biggest Chinese brand in terms of market share is BYD with 3.85 per cent, followed by Great Wall with 3.83 per cent and Geely with 2.95 per cent, and there is no sign of that growing any time soon.
    European firms hold the cards and are using the burgeoning Chinese demand to make up for near-disastrous business at home. With healthy first-quarter local sales of 70,000 units (up 30 per cent), Citroën China sold more cars there than in its domestic market for the first time in history.
    For this company, as for many, Chinese customers are life savers, and provided Chinese governments don’t alter the current terms of business, so they will remain for the foreseeable future.