The escalating figures in China’s passenger car sales is expected to last for at least another 20 years with a number of different factors contributing to this growth.
State media news in TimesOman reported a rise in passenger car sales in China by 16.1 percent in March from the same month last year to 567,000 units.
The first three months of 2007 witnessed sales increase of 22.4% to 1.5 million units, according to the China Association of Automobile Manufacturers. For sedan cars sales soared 30.1% to 1.1 million units in the same period while multi-purpose vehicles rose 14.9% to 53, 300 units and sports utility vehicles escalated 15.8% to 71,600.
The booming Chinese economy and the migration of the population to big cities from rural areas resulting in the need for a car are primary factors for the anticipation of passenger car manufacturers for growing demand for their products. The increase in affordability by customers for passenger cars has also been facilitated by continued price deflation and the availability of greater numbers of new, smaller and cheaper cars.
Evidence is also increasingly apparent of rising fuel costs triggering a preference for smaller and more fuel-efficient subcompact cars. The greater variety of models is also contributing to sales growth with greater affordability.
Industry experts believe that the rapid growth in China’s passenger vehicle sales should continue for another 20 years with growth expectation of 15-20 percent in the next decade. They also for see middle-income level families affording cars by 2009.
The growth expectation in the automotive market was due to the continuation of healthy economic growth since 1990s. The growth rate however failed to keep pace with the potential of the Chinese market. In 2001, China’s entry into the WTO regime emerged as the most significant contributor of the automotive industry growth.
A research report China Automobile Industry Forecast (2006-2010) by RNCOS, expects the share of passenger cars in the overall auto sales to approach 55% from the current share of nearly 48%. With the introduction of fuel efficiency standards, small car sales will be boosted. The relatively underdeveloped SUV segment in China has potential for strong growth in the immediate future. Finally, the upcoming Beijing Olympics 2008 calls for logistics investment that will lead to an increase in commercial vehicle sales in the country as well.
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