Nobody in possession of his or her faculties doubts that China will remain the world’s largest auto market for this year and years to come. In 2009, Chinese bought 13.6m vehicles, up 45 percent. In the U.S.A. 10.4m units changed hands in 2009, down 21.2 percent. This year, the U.S. A. is expected to recover, but not by much: J.D. Power forecasts 11.2m units sold in the U.S. for 2010. How many will be driven off dealers’ lots in China this year?
Chen Hong, president of China’s largest automaker SAIC, expects the Chinese market to grow to 15.5m units in 2010, reflecting a very cautious growth rate of around 9 percent. He had to be cautious, the remarks were made at the annual shareholders’ meeting in Shanghai yesterday.
Others are more bullish. While nobody expects a repeat of last year’s 45 percent growth, 25 percent are seen as possible by some. One of those is an “institute of China’s auto market index,” cited by Gasgoo. They project that China’s new car sales will reach 17.05m units by year end. How did they arrive at this number? Easy: Add 25 percent to last year’s numbers.
Last month, Rao Da, general secretary of the China Passenger Car Association, was in agreement with the institute’s sentiments, saying “that China’s vehicle sales will surpass 17 million units this year, growing by about 25 percent.”
They underpin their assumptions with the fact that China’s domestic consumer demand will continue to be very strong. The penetration rate of cars in China is still low. According to the institute, the registered vehicles per 1000 people are only 20.5 units.
Whether it’s going to be 15.5m, or 17m, the Chinese market has just started to grow and will continue growing until market saturation sets in. A market begins to be saturated at more than 500 cars per 1000 people, and by that measure, China is several decades away from saturation.
I know it hurts some, but we better get used to the idea that China will be the world’s largest car market for the foreseeable future.