By on April 19, 2010

Whenever yours  truly sings the long-term praise of the booming Chinese auto market, it elicits loud protests: “Can’t be! Bubble market! The environment! (Our gasoline.)”

The people who make and sell cars for a living have a different opinion. The AlixPartners consultancy asked  50 senior executives from both foreign and domestic players in China’s automobile industry how much they think the Chinese car market will grow between now and 2015. Guess what their answer is?

The 50 executives expect “steady growth of the Chinese auto market in the future, with a projected average sales growth of 20 percent per annum between now and 2015”, said John Hoffecker, managing director of AlixPartners.

20 percent ain’t much? Don’t forget the magic of compound interest.

If the 50 guys are right on, it will be 16m cars this year, 24m cars in 2012, 41m cars in 2015.

Can’t be! Communist propaganda! Lies! Bubble market! The environment! Our gasoline! Let them ride bicycles!

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18 Comments on “Car Execs Predict: 41m Cars Per Year In China 2015...”


  • avatar
    b1msus93

    5 years is a long time, but this is inevitable.
    It’s a good news for all automakers anyway.

  • avatar
    twotone

    If this is close to being accurate, $4.00/gallon gas will seem like a bargain and distant memory.

    Twotone

  • avatar
    porschespeed

    I remember very distinctly hearing from the “experts” DOW 15,000 was just around the corner, that housing prices would continue to rise, that CDOs and CDSs were perfectly safe instruments, that the ratings agencies told the truth, that outside auditors give an honest complete picture, that the regulators watch everything – there could never be a multi-$B Ponzi scheme…

    I also remember being told ‘it was all different this time’ and that I ‘just didn’t understand’ that Enron was the future.

    Of course, I was not the only one that saw the writing on the wall when most appraisals were drive-bys done by community college students, when Beanie Babies began selling for over $20, or when stocks started trading at P/Es well over 10.

    As to the sources for this report, they have the same inherent bias that was prevalent in the top stories on the MSM news during the US boomlet.

    I’m sure each and every one of those execs has rosy predictions – that’s the job in that kind of environment.

    Perhaps the Chinese economy will set new historical precedent, but I play the odds.

    Tulip bulbs anyone?

    • 0 avatar

      @porschespeed -

      Those closest to the bubbles are always the last to see and acknowledge them. I do not doubt our dear Mr. Bertel’s sincerity, but as The Bard would say, he “doth protest too much”.

    • 0 avatar
      porschespeed

      I too have little doubt of Herr Schmitt’s sincerity, or the delusions that the sources cited are under. But, doesn’t mean I’m drinkin’ the flavor-aid.

      Well said, it is hardest to see the bubble when you are in it. And who wants to be the one to spoil the party?

      “Treadmill to Hell” is my current favorite quote about the Chinese economy.

  • avatar
    Contrarian

    Are there enough resources in the world to supply 400 million cars or so? Is there enough oil in the world to power them, or places to drive and park them?

  • avatar
    Contrarian

    ^ In one medium size country.

  • avatar
    folkdancer

    I’m ready, I have 3 bicycles. But here in Phoenix we may not be able to afford the energy to cool or pump water to our homes. Is there still time to move to Eugene?

    Realistically I do agree completely with Porshespeed above.

  • avatar

    Folks, in the more than 30 years I’ve been in this business, there is one rule that I have learned to respect: As long as people have the money, they will not stop buying cars until there is at least one car for every two people. China is far, far away from that. Even if they buy 50m cars a year, it would take them more than 12 years. The most simple facts are often most easily forgotten.

    Boom and bust cycles are short term phenomena. Size of the market and market saturation are long term phenomena. China has just begun to motorize, and it will continue to motorize at a solid clip until market saturation. Economic boom and bust cycles will hasten or slow this growth, but they cannot stop it.

    America is an over-saturated market with more than 800 cars per thousand, and therefore very sensitive to economics. Why buy a 4th car if you already own 3?

  • avatar

    @Contrarian: China is bigger in size than the US, albeit our claims to the contrary.

    • 0 avatar
      Contrarian

      It’s actually pretty close to a tie. Using the UN definition, I believe China is #4, behind the US at #3. But either way, I’ll grant you China is a big country, although I guess that makes Russia really big.

  • avatar
    Mr Carpenter

    It’ll never happen because the globally intertwined economy will collapse like a ponzi scheme before that.

    Have a read then a video look.

    http://theeconomiccollapseblog.com/archives/if-the-u-s-economy-goes-into-the-toilet-will-it-result-in-a-complete-and-total-collapse-of-society

    Of course, literally most people, when presented with this information, may as well look like spoiled 8 year old brats who don’t want to hear grown-up instruction, running around with their hands over their ears shouting “la la la, I can’t heeeeear you”.

    Pretty well sums it up. But the Titanic hit the iceburg long ago, and it’s well past the tipping point of being able to save the ship. And there well and truly too few lifeboats.

    The greatest depression is going to make the great depression look like a tea-party. (Pun intended).

  • avatar
    porschespeed

    As long as people have the money, they will not stop buying cars until there is at least one car for every two people.

    While we can kick the practical implications of all those cars with that population density, coupled with the knock-on effects on energy consumption and the like back and forth all day long, I’m happy to table all of the nasty reality that comes from that many vehicles.

    Let’s just deal with the 400 LB gorilla.

    In my analysis (and that of some people managing more money than most countries) the critical part of the statement is “As long as people have the money”.

    Even if we grant solution of ALL the problems caused by 50MM more cars, the real trick is customer money.

    China’s social safety net is the citizen’s high rate of savings. When construction collapses, not if, but when it does, 50-60% of China’s GDP simply goes away. Poof.

    Lots of imaginary ‘net worth’ vanishes, consumer spending contracts, commercial RE collapses even further, banks take the hit, and then it gets ugly.

    The big pile of foreign reserves will help to cushion the blow and prop up the banks, but I don’t see car sales accelerating during such a period.

  • avatar
    50merc

    Some people ask “Why buy a 4th car when you already have 3?” I ask, “Why stop with four?”

    Booms and busts come and go, but unless the Greenies get their way humans everywhere will continue to seek to improve their standard of living.

  • avatar
    BDB

    When I read the Onion piece linked below, I immediately thought of Bertel, lol:

    http://www.theonion.com/articles/report-china-to-overtake-us-as-worlds-biggest-assh,17277/

  • avatar
    baggins

    If it could be easily escrowed, I would gladly wager $10,000 USD that China will not, in fact, buy 41M cars in 2015.

    Bertel sounds like exactly like every dot com dolt did in 1999.

    The world just dont change that fast.

    Hell, I would further wager that 50% of the execs in the study even considered that 20% a year for 5 years means 41M cars. They just threw out a number.

  • avatar
    Michal

    Sounds to me like some analyst drew a line on a graph over the past 5 years of car sales in China and just extrapolated it into the next 5 years. I see no problem with that…

    How are these 41,000,000 cars per year meant to be powered? Is China planning to liquify its coal or import millions of barrels per day like the USA does?

  • avatar

    Folks, some of you might exercise a little caution on the keyboard. Learn how to read. Or at least don’t post when inebriated.

    1.) I reported the results of a study. The study is not my prediction.

    2.) I will never wager that China will buy 41m cars by 2015. But if someone wants to bet against my prediction that China will have some 700 million cars in 20 years, I’m game.

    3.) Careful with the name calling. If someone calls a TTAC author a dolt or similar again, then that person will receive an invitation to Beijing for a little re-education. Or, a disinvitation from TTAC.

    Please refer to http://www.thetruthaboutcars.com/faqs/#commentpolicy once in a while. It’s an interesting read.


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