Forecasters at IHS Automotive expect the Chinese passenger car market to expand by around 11% this year.

IHS Automotive data show that the passenger-car segment continues to be the main contributor to growth in vehicle sales in China, with sales of more than 13m units in 2012, up 7.6% year-on-year, with the C-segment seeing the largest volume sales. 

IHS also says that China’s vehicle exports also grew during 2012, with total shipments rising to more than 1m units, of which passenger vehicles, specifically sedans, were the largest export group. 

The automotive forecasting company says that the majority of the new car sales growth in China stem from growth in the interior regions of China, where the cars-to-population ratio remains lower than in the coastal areas of China. This is where China’s government aims to push further growth through increasing salaries and therefore higher disposable incomes, it says.

IHS also points out that China sees the automotive industry as a pillar of its economic strength, which can help the country maintain an annual GDP growth rate of more than 8%. Speaking at a recent industry conference, the vice-president of the Development Research Centre of the State Council, Hou Yun Chun, stated that by raising salaries across China, sales of vehicles could be sustained and this could help the country achieve a constant 8% annual GDP growth rate. “By the end of the next eight years, we hope our [China’s] average salary can be doubled so we can increase our consumption power,” he said, referring to statements made at China’s recent 18th National Party Conference. “As living standards increase, we can see more cars being bought.” 

Hou added that the country needs a GDP growth rate of 8.8% or above per year to bring about a doubling of salaries, which would raise personal disposable income within China and, therefore, bring continuous growth in demand in the automotive industry. The increase in sales in the automotive market would then prop up overall growth of China’s economy, he said. “The auto industry is an important, pillar industry to realise the 8.8% GDP growth rate,” Hou said. 

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IHS says that the major brands that control the majority of China’s passenger-car market are those automakers that push sales in the top volume-sales segments. VW is the strongest brand in China, and the Volkswagen Group is the strongest overall parent automaker in China with total sales of 2,608,896 units in 2012. The Hyundai Group, including the Kia and Hyundai brands, is the second-largest in the passenger vehicle segment with sales of 1,340,034 units in 2012, while GM is third with sales of 1,393,517 units. The VW brand saw sales of 2,050,193 units during 2012, followed by Hyundai with 859,595, the Nissan brand third with 751,509 units sold, Toyota fourth (745,565), and Buick fifth (697,455). VW gains its lead from strong sales in the two largest segments in the Chinese market: the car C-segment and D-segment. 

The C-segment accounted for sales of more than 6m units in 2012, according to IHS estimates. The VW brand sold more than 1m units in the C-segment alone, with models such as the Lavida and Jetta. The D-segment accounted for sales of over 2m units in 2012, with the VW brand selling a total of 647,362 units of models such as the Passat, Santana, and Magotan.