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China Auto Industry - Domestic Sales to Scale up 15% in 2008
Sep 06, 2008

The Chinese automobile sales are projected to grow by 15% this year as the demand for vehicles is rising and the country has low car density.

An Official at the China Association of Automobile Manufacturers (CAAM) said on June 21, 2008 that the domestic automobiles sales in China are anticipated to grow by 15% to 10 Million this year on account of strong demand for passenger cars, as reported by
Xinhua.

As per the figures, during the first six months of the year, over five million domestically manufactured vehicles were sold and around 4.5 Million were produced and sold in the market in the first five months. Besides, the automobile production rose by over 17% and the sales volume augmented nearly by 19% year on year in the first half of 2008.

A host of factors like fast economic growth, rising disposable income and desire to uplift the living standard contributed to the rapid growth of automobile sales in the country. Another key factor that pushed up the sales in the Chinese automobile sector is the policy of restructuring the industry and following the inorganic route (through M&As) to expand. Moreover, multinational companies are making inroads into the country and augmenting their investments to tap the growing automobile demand in the country. Besides, the automobile industry exports have also risen from the country.

China has strong potential to offer more growth opportunities to automobile manufacturers, as the car density in the country is very low at 14 per 1,000 people. Hence, low car density is giving more scope for growth of the automobile sales.

According to a Research Analyst at
RNCOS, “The Chinese automobile industry is booming and the trend is likely to continue in coming years. However, rising cost of raw material, like iron and steel, might dent the industry growth. As a result, the market value of new vehicles is moving upward. Therefore, the industry players should come up with new marketing strategies and attractive financing policies to sustain the current growth rate.”

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