Due to only a gradual increase in vehicle registrations in China, a dramatic growth in the automotive aftermarket in the world’s fastest growing economy is not likely, according to an article in Market Analysis, the quarterly research newsletter published by the US-based Motor & Equipment Manufacturers Association (MEMA).
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The Economist Intelligence Unit estimates that China’s total vehicle registrations will reach only 11.7m by 2015.
The automotive aftermarket should feel the impact from what is projected to be the relatively simple acceptance of the “mini car,” according to MEMA senior market research analyst Richard Anderson.
The article also explains the future of China’s economy which can be accurate summed up by the word “change.” Increases in the likes of cell phone use, large purchases and vehicle sales signify growth and productivity in China’s workforce.
China’s growth rate is expected to continue increasing, but some modifications and improvements will need to be accommodated, Anderson noted.
“When examined in the context of total US automotive products imports, the importance of China as a supplier is growing rapidly,” Anderson said “As Chinese-made goods, especially automotive products, gain greater acceptance in the United States, the growth in China’s share will accelerate.”
Anderson noted that China’s economy, despite its lack of skilled labour, is expected to continue growing at a substantial rate. According to its state information centre, Chinese GDP growth is “expected to exceed 9.2%” following a roughly 10% growth in 2005.
While growth increases, though, consumption is slowing slightly. The Chinese government has maintained a focus on the growth of its consumption-based markets, but domestic consumption is still expected to slow from 13.2% in 2005 to 12.5% in the first half of 2006, according to the article.
China’s infrastructure does not suffer from problems with labour in general; there is a vast pool of possibilities. However, it lacks workers with specific talents capable of performing particular jobs. Productivity has not necessarily suffered, though. The progress of 21,000 miles of expressways at a rate of roughly 2,500 miles per year is significant. There is also an additional 18,000 miles in planning.
In terms of production and exporting automotive parts, China is growing rapidly. In 2005, the US exported $623m to China. Ten years earlier, it exported roughly $83m. Imports from China 10 years ago were about $635m, but are now closer to $4.7bn. Because of this imbalance, the US trade deficit with China and automotive parts in particular was $4,784m in 2005. This is roughly $1.5 bn more than the previous year.
