China will ‘hardly be’ expected to continue its astonishing growth rates of recent years, but still remains a vital cog in automakers’ armoury, says Yanfeng Automotive Interiors (YFAI).
The country could reach the extraordinary high of 28m annual vehicles produced by the end of the decade, but has seen somewhat of a, relative, slowdown in heady double digit growth rates of late.
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Despite the often gridlocked situation in China’s major Eastern Seaboard cities, the country’s vast interior obviously has enormous space to accommodate the huge number of new vehicles, a position YFAI deputy CEO, Weizhong Wang endorses.
“I think China has room to support that [growth], Wang told just-auto at this week’s YFAI pre-Frankfurt briefing in Düsseldorf. “Central and West China, most of the infrastructure including road and train, electricity and power stations [are] already there.
“There [are] highway [s], but not so crowded. We will support growth in that [Central, West] region. China is investing [in] infrastructure even ahead of the vehicle density coming. Tokyo, Osaka, are relatively high density, but with high efficiency.
“The country remains in significant growth, but can hardly be able to achieve double digit growth in the long run. It is like doing business with 34 different countries. Until 2020 the forecast [growth] is 7.9% – this year around 7%. The wage of private enterprises has grown quite fast as well [as] the economy is shifting to private consumption.”
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By GlobalDataThe YFAI deputy chief noted Beijing was continuing to support “the big four” automakers in their M&A activity, in a bid to slim down the number of OEMs and manage current overcapacity.
Currently 90% of volume in China is manufactured by 14 OEMs including joint ventures.
“China is the largest and most competitively tough market in the world,” added Wang. “It is tough competition because everybody is there. Unique understanding of this biggest market will be very important for a global company to know where and how to compete.
“There is increasing demand for cars for the new citizens moving from rural area [s] to urban area [s]. Luxury cars are quickly increasing [although] we expect growth in 2015 to be a year of cyclically lower growth of 4% in passenger vehicle sales.
“[The] vehicle market [might] approach 28m in 2020. The commercial vehicle market has been subdued due to low emissions rate [regulations].”
YFAI is the newly-formed joint venture between Yanfeng Automotive Trim Systems and Johnson Controls and will be unveiled at next week’s International Motor Show in Frankfurt.
