Why China's automotive market won't stop growing
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 percent of the population still don’t own cars. Vennin estimates that on a conservative expansion of 7.5 percent per year, over the next 10 years China will reach a staggering 30 million units, and even then less than 20 percent of Chinese people will own cars. Today’s ownership figure for Europe is 50 percent; in the US it’s 80 percent. Mostly, new Chinese cars are C-segment four-door saloons; hatchbacks account for only five percent 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. Volkswagen is China’s biggest car seller, taking 17 percent of the market. Hyundai and Kia, growing rapidly, control well over 10 percent, and even Buick has six percent. Japanese makers have been strong — led by Toyota, Nissan and Honda — but are declining disastrously at 15-20 percent 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 percent, followed by Great Wall with 3.83 percent and Geely with 2.95 percent, 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 percent),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 lifesavers, and provided Chinese governments don’t alter the current terms of business, so they will remain for the foreseeable future.
By Steve Cropley, editor-in-chief, Autocar UK
Photograph: Beta 5 heralds the arrival of a new platform technology for Chery, called iAuto.
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