Research firm IHS Automotive forecasts that the Chinese vehicle market will surpass a staggering 30m vehicles a year by 2020.
Sales of vehicles in China this year have slowed after growing by around a third to exceed 18m units in 2010. IHS says that the market will continue to grow, ‘albeit at a slower rate’.
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In 2010, 11,689,738 passenger cars, 5,363,250 light commercial vehicles (LCVs), and 1,452,461 heavy commercial vehicles (HCVs) were sold in China, according to IHS Automotive data.
By 2020, China’s annual vehicle sales will have risen by 72% compared with 2010, current IHS Automotive forecasts show. By 2020 China will have annual vehicle sales of over 30m units.
The research firm also says that current market leaders in China want to expand their presence in the country to maintain market share. As Chinese consumers become savvier and as the rate of growth in the market slows, competition among automakers will intensify, IHS says.
Domestic automakers are increasing their acquisitions of international technological companies and strengthening partnerships with international automotive engineering houses as they look to develop new products to stay in the game, IHS maintains.
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By GlobalDataBYD, SAIC Motor Company, BAIC, Changan, Chery, Geely, FAW, and Great Wall are steadily raising funds via new share offerings, listings, and loans to update their product line-ups as the market heats up, and the future for smaller, less experienced automakers looks increasingly uncertain.
Analysts have long suggested that the highly fragmented auto industry in China will see consolidation, with bigger groups able to exploit greater scale economies eventually absorbing smaller players (Nanjing Auto being taken over by SAIC is an example). However, such industrial consolidation has been slow to materialise due to the strong regional and local power bases that many Chinese manufacturers have, as well as booming demand.
At the same time as the pressures rise on China’s indigenous players, the established international carmakers with JVs are now ‘pulling out all the stops’ to raise their game in China and win over new customers, build brand loyalty, and increase their share of the world’s largest automotive market, IHS adds.
See also: German OEMs step up investments in China
May 2011 management briefing: BRIC markets review – China
