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China's Auto Market On A Roaring Spree
Apr 24, 2007

The only way China’s auto industry seems to be headed is up. Rapidly escalating figures annually point to a growing boom in this sector.

China Association of Automobile Manufacturers (CAAM) revealed figures for the 1st quarter of 2007 during which the country’s vehicle production as well as domestic sales rose over 20% YOY. The 2.19 million automobiles produced by China during the 1st quarter represent a 22.6% rise YOY, comprising around 1.58 million SUVs, MPVs, and passenger cars and 614,500 buses and trucks. A report by The People’s Daily also indicated a 22.2% increase in the sales of domestic car that reached 2.12 million units, according to the news from
Auto Industry.

By 2007, the country’s total annual auto making capacity will swell to nearly 15 million units exceeding the expected annual demand of about 7 million units, predicts the NDRC (National Development and Reform Commission).

China’s vehicle production is on a rapid upswing due to diversified demands of consumers. Above 100 new models, both brand new and modified, have been continuously churned out by domestic vehicle manufacturers over the last two years.

Spiraling passenger car sales remained the primary factor for increasing auto sales in China. Behind this increase in China’s vehicle sales was the continued price deflation apart from a greater number of smaller, cheaper cars resulting in increasing consumers being able to afford them.

The rate of China’s economic growth also contributes to this increasing affordability of its people. Then the ever-increasing availability of models is adding to the sales growth for greater affordability. The upward trend in auto production and sales is also credited to the urban migration.

Yet another factor behind China’s growing auto market is the rapid expansion of the second hand vehicle market - a likely contender for the new hot spot in the nation’s auto market. China Automobile Dealers Association’s newest findings put second hand vehicle transaction volume in 2006 at 1,905,900 a 31.5 percent hike from the previous year.

A research analyst at
RNCOS sums it up as the auto industry’s prominence in China with its characteristic of forward and backward linkages across the economy. It can be concluded that there is a strong likelihood of the light vehicle marker to maintain its robust form thanks to solid economic fundamentals and increasing incomes spurred by the on-going price war among manufacturers.

Related Market Research Reports:
China Automobile Sector to 2010
Vietnam Automobile Industry Forecast (2007-2010)

Hybrid Cars Market Outlook