China's 2010 Car Sales: More Than 15 Million? More Than 17 Million?
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.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Well articulated Phil... I agree with your position entirely. The West often fails to appreciate the fact that despite the GROSS figures, China remains largely a developing country outside of the coastal regions. As one Chinese official had stated several years ago, China is essentially a collection of prosperous urban centers - akin to European cities in prosperity, seperated by vast swaths of rural areas - more akin to Africa in backwardness. Though somewhat of a stretch, it does capture the essential problems of a country that is caught between modernity and development. It will easily be decades before China can compare itself to the US in terms of per capita wealth. Sadly, this fact is lost upon the vast majority of neo-conservative fearmongers, who speak of the immenient "China Threat". As with other sectors, China's growth is seen as an inevitable challenge to the European and American dominance. Few consider it from the Chinese perspective, being essentially a poor country that is beginning to dig itself out of its hole. At the end of the day, the Chinese are building cars not to challenge the status quo, but rather to provide a means to make private transportation more accessible to the masses. It is somewhat hypocritical for us to critize the rise in personal car ownership in a developing country, while we ourselves sit in the well-padded leather driver's seats of our Mercedes and Cadillacs.
I am more concerned about the environmental impact of all these cars growing in China - as opposed to opining whether Mr. Chen is going to have two cars in his garage in Hangzhou. If you've ever traveled to a major Chinese city like Beijing, Shanghai, Guangzhou and Shenzhen, the manufacturing center for many multinationals, vehicle traffic congestion is just a bear. There are about 300 new vehicle registrations every day in Shenzhen. They've jacked up car license fees and other taxes to no avail. As someone has mentioned hopefully new clean technology for vehicles will help mitigate this somewhat. But there will be great impact on the environment nevertheless given China's population size.