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Mainland Carmakers Saw 16% Rise in Sales Last Month
May 18, 2007

Mainland carmakers, which used price decline as their most powerful tool, could successfully increase their sales by 16% last month and the figures reached 545,800 units during the same month.

Sales of mainland carmakers was boosted by 16% to reach 545,800 units over the last month, owing to the price reduction they announced to win more customers of the 2nd largest market in the world. Last month, Chery Automobile, Peugeot Citroen, and other players in this segment reduced prices, thereby fueling the competition. Chery announced price cut in its Qiyun sedans and QQ compact-cars by almost RMB 23,000 yuan, whereas Peugeot reduced its ten models’ prices by nearly ten percent. China Knowledge
had published this news.

Buying power of Mainland China’s middle & upper class income groups has increased. And, the augmented use of cars in this region, a resultant of a ban being imposed on electrical bicycles, may imply that currently there’re twenty times more cars are on the roads.

Wu – chairman for Tong Yang - hopes that the market for auto-parts will further rise in the region. He divulged, “Under the "macro adjustment" economic policy adopted by Mainland China's central government to cool down economic growth, the automobile industry in China has experienced a healthy weeding-out process, which has left the remaining players stronger”.

Growth is expected in the auto market mainly due to the ongoing healthy growth in economy since 1990s. However, the rate of growth couldn’t remain on par with the potential of China market. China entered the WTO in 2001, which played the major contributor in the growth of automotive industry in China.

Industry experts anticipate that this rapid growth in the passenger car sales of Mainland China will continue for the next 20 years as well, and the industry will grow at a rate of around 15-20 percent over the next ten years. They also predict middle income level families will be able to afford cars by the year 2009.

According to
RNCOS report on “China Automobile Industry Forecast (2006-2010)”, passenger cars’ share will reach more than half (55 percent) of the overall auto sales in comparison to 48 percent at present. Sales of small cars will boost, as the fuel-efficient standards are introduced. SUV – which is a relatively under developed segment in China – possesses huge potential of strong growth in the near future. And, the upcoming Olympics 2008 to be held in Beijing lure the logistics investment leading to a rise in the sales of commercial vehicles in the country.

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