Growth in the Chinese car market has slowed considerably in the past two years but it will continue at a steady double-digit clip in line with the country’s economic growth, motor industry executives in Tokyo for the motor show said at an industry conference.
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Reuters said sales of passenger cars in China doubled to about two million vehicles in 2003 from 2002, but the rise slowed to 15% in 2004, causing a supply glut and a fierce price war as car makers sought to reduce inventory.
Executives reportedly said a fast-growing economy, rising incomes and improving roads would ensure an annual expansion of at least 10% for the foreseeable future.
The news agency noted that, despite falling profits, many global vehicle makers are counting on China for much of their growth as other big car markets around the world stagnate.
Katsumi Nakamura, president of Dongfeng Motor Co., the local joint venture company with Nissan Motor, reportedly said that car consumption would get a big boost from the large population of 30-somethings once they have children.
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By GlobalData“Car sales in China depend not just on consumer needs but government policy, so we don’t expect to see growth at the 50% level again,” Nakamura said, according to Reuters. “But we do anticipate stable growth of 10 to 20%.”
The report noted that the Chinese government, which tightened credit last year to slow a red-hot economy, last weekend projected automotive demand including commercial vehicles to reach eight to nine million units a year by 2010, compared with around five million last year.
Even that would leave the country with enormous potential for further sales, Reuters added, since there would still be only four cars per 100 people in 2010, according to China’s official Xinhua news agency.
The fledgling but growing auto financing business in China would also help spur demand, Noriaki Yamada, president of FAW Mazda Motor Sales, Mazda’s local sales venture, reportedly told the conference.
“Right now only about 10% of car sales are financed by auto loans. By 2010 maybe that will rise to 30%,” he said, according to Reuters. “It wouldn’t be a stretch to expect 10-12% growth (in Chinese car sales).”
BMW, meanwhile, expects the market for premium cars to be even more promising, since they account for just 2% of the Chinese market compared with around 10% elsewhere.
“The premium segment in China will continue to grow because customers want the original,” BMW Chief Executive Helmut Panke told Reuters at a separate event earlier in Tokyo.
“(China) is not that different (than other markets). It is just bigger in its potential.”
