A new research report by just-auto.com forecasts that the Chinese passenger vehicle market will hit six million units by 2009, belying current concerns over slower market growth and excess supply.
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A six million-unit annual car market would elevate the Chinese new car market to number two in global terms, leap-frogging the Japanese and German car markets.
The Chinese new car market is estimated at around 2.1 million units in 2003, almost doubling in the face of China’s rapid rate of economic growth. However, this year has seen market growth slow as credit controls have been imposed by the government amid worries that the economy is growing too fast, with the risk of ‘overheating’.
Nevertheless, the report forecasts a car market of just under 2.9 million units for 2004.
The report suggests that the key drivers of medium- and long-term market growth in China are economic growth and rising incomes, which are fuelling an increase in China’s level of motorisation and the numbers of cars in use.
Report author David Leggett, just-auto’s editor, said: “There are concerns right now over the government initiated credit squeeze, an ongoing price war and some excess production capacity. And these things will certainly mean lower profits ahead for some Western car companies with vehicle making joint ventures in China.
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By GlobalData“But the longer-term outlook for car demand in China remains extremely positive. Rising incomes and especially the emergence of a new urban middle class with increased spending power will continue to drive the market up. Looked at another way, there is a lot more supply coming down the line and customers are certain to be found for those cars, with consumer credit playing a key role. In fact, the financing infrastructure needed to underpin future car sales is beginning to take shape now.
“Our base case scenario sees the current market malaise as a mainly temporary adjustment in response to short-term overheating worries surrounding the Chinese economy, the impact of China joining the WTO and some excess supply. But the rate of growth of the market will also be slowing to a more sustainable level as the rapid initial supply boost and market surge eases towards the end of the decade.”
The findings on China are part of a broader study into the world car market that is compiled region-by-region and forecasts annual sales volumes out to 2009.
For the full report “Global market review of car sales – forecasts to 2009, 4th edition” click here.
