The Growing Chinese Automobile Market
The automobile market is one of the largest consumer markets in the United States. Almost every family owns at least one car, and even with concerns of emissions and global warming, cars are still the most popular way to get around. No matter where you drive, you always seem to hit some bumper-to-bumper traffic. On the other hand, cars are not as widely used in China, a country of 1.3 billion people. That doesn’t mean that the auto market is small, though. In fact, the Chinese auto market is heating up now!
Personal car ownership is driving the million-vehicle-per-year growth in China’s auto industry. Today, seven out of eight new cars are bought by first-time car buyers. Economic growth and the corresponding boom in the auto industry in China– and in the private passenger car market in particular — has attracted more than 100 global and domestic vehicle manufacturers to compete on the Chinese stage. Nearly all of them — including General Motors Corp, Ford Motor Co and Chrysler LLC — plan to display their offerings, unveil new concepts and vie for consumers at Auto China 2008.
China’s growth is in stark contrast with what is happening in North America, which in 2007 experienced its worst sales in 15 years and where US automakers reported historic losses. In the last 10 years, China’s auto market has grown 500 percent. Experts at the Automotive News China Conference in Beijing forecast continuing annual increases of about 10 percent in the Chinese market for decades to come.
An interesting phenomena is that Japanese brand automobiles (Toyota, Honda, etc.) are taking the “leading roles” in both markets. The Chinese market has to face to some strong competitors from other Asian countries in order to win the market. Just like early Japanese and Korean manufacturers, Chinese companies have begun by focusing on the low end of the market, where profit margins are smaller.
With prices starting as low as $6,000, Chinese-made cars are attracting a growing number of Chinese motorists. Office workers are very keen to get their hands on their first car. The nippy Chery QQ is popular choice, and it comes in a range of bright neon colors. Labor is cheap, so the cars can be produced cheaply. Since Chinese car manufacturers have low prices as their main advantage, unfortunately the quality of their final product often suffers.
China is a huge market, which explains why domestic producers are preparing to serve their home market first before targeting global markets in earnest. Nanjing Automobile and Geely say they will build models for the foreign markets, but for now only a tiny number of Chinese-made cars are sold overseas. In 14 years, though, experts expect that there will be about 140 million cars on Chinese roads. That’s more than the United States has today!
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