By on May 26, 2010

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.

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11 Comments on “China’s 2010 Car Sales: More Than 15 Million? More than 17 Million?...”

  • avatar
    Steven Lang

    The only time it’s going to hurt is when or if certain commodity prices spike upwards.

    Most folks at TTAC would welcome any type of growth for any country so long as it has a healthy foundation… and boy do I hope these comments below don’t turn political!

  • avatar

    So that caption we get when we put our cursor over the picture, is that the caption in the Chinese papers? If it is, interesting and I’m wondering how long it will take to have a car dealer in the states try it during his annual “TENT SALE.”

    As far as the growth of the Chinese market… the growth stopping would be a bigger story at this point. I’m just waiting to see how long it takes them to start selling here.

  • avatar

    Would the 500 cars per 1000 people really be the mark for saturation in China? My understanding is that large part of China’s population is very rural and is a long ways away from being able to afford cars.

    • 0 avatar

      You’d be surprised. A lot of the current growth actually is coming from the rural areas, driven by the government’s “cars to the countryside” program. In many places, there aren’t even dealerships, so manufacturers organize traveling roadshows.

  • avatar
    healthy skeptic

    China isn’t just going to remain the largest auto market for years to come–that change is likely permanent. The only one that could ever unseat them is India, and that’s unlikely to happen for decades. In either case, the days of the U.S. being the world’s largest auto market are gone.

    Here’s the math:
    China: 1.3 billion
    India: 1.2 billion
    U.S.: 300 million

    • 0 avatar

      These numbers show one other thing-because 2 billion Chinese and Indians are all buying their first car at the same time, it doesn’t matter how many Priuses Americans buy-carbon emissions from motor vehicles are going to increase greatly. Any attempt to stop global warming will fail because as long as we have cars, telling them that they can’t have cars as well isn’t going to work.

    • 0 avatar

      Any attempt to stop global warming will fail because no one understands what it is, or even if it is.

  • avatar
    Phil Ressler

    >>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.<<

    Why would it hurt? Fixating on the number of cars sold in China reminds me of when people worried that somehow the Soviet Union was going to overtake the US economically because they poured more concrete and made more steel than we did for several years. Duh -- they had more people, real wartime devastation to overcome, and 8,000,000 square miles of territory to build things on, including roads and rail, against our already-more developed, not-war-ravaged 3.5 million square miles of territory. It was nonsense.

    The Chinese market is developing a sustained middle class and has 4X our population. They're just getting started with common incidence of personal mobility. Regardless, their per-capita wealth & productivity will remain behind us for years -- decades even. Wealth of nations is not a zero-sum game. It was a foundation of US international policy since WWII to foster proliferation of per-capita wealth and expansion of growth markets globally, to raise living standards. We used open trade and the leverage of American consumption as an active instrument in econo-foreign policy, both to foster a more stable world and to grow markets for our own products.

    A large Chinese car market creates opportunity for more than Chinese people. We invested in economic opportunity and growth in Europe, and we actively encouraged the symbiotic economic relationship that has bound the US and China in a range of common interests and co-opetition since roughly 1990. We have willfully fostered the progressive reduction of the United States' relative global economic dominance since the Marshall Plan. That's over 60 years of policy with some consequences materializing as challenges that are difficult for some people and sectors to manage, so it remains to be seen whether six decades of consensus holds up -- or should.

    Regardless, the US will return to, and pass, its prior peak of about 17.5 million new annual automotive unit sales in this coming decade. On recovery alone I expect we'll pass 15 million new vehicle sales in 2014, and continued growth in both population and economic performance assures we'll punch through the old peak within a few years after that.

    We can't -- and shouldn't try to -- truncate China's economic progress. We should compete. We should press them to open their markets. We should have the military/political/economic capabilities to assert and protect our interests. But by and large, an economically strong China is better for the world than a weak one.

    The environmental effects of Chinese growth are just a reality to be mitigated. They'll be buying cleaner cars than we did when we were at a similar stage of proliferating mechanized personal transportation.


  • avatar

    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.

  • avatar

    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.

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