Top 10 Stories From Our Archives
CHINESE CAR MARKET EXPLODES—CLICK HERE FOR TOP SELLERS
Although only a very small percentage of the 1.3 billion Chinese citizens own cars, the number is growing. In 2006, automobile output and sales grew by over 25%, topping 7.20 million vehicles last year, according a recent CCID Consulting press release. The Chinese consulting firm states that China has become the second largest auto consumer and the third largest auto producer in the world.
The consulting firm also says that China’s automobile market’s maturing trend is reflected in four aspects: In terms of market structure, thanks to a new consumer tax policy, the demand for passenger cars in China has been greatly stimulated. Passenger cars are taking up an increasing proportion of the market, rising to 72% in 2006 from 69% in 2005.
As for consumption, consumers have gradually become more practical when making decisions. This plays a pivotal role in pushing forward continuous product improvement, continuous marketing innovations and the formation of overall competitive advantages.
As for policies, China has successively introduced a defective automobile recall system and new policies encouraging independent innovations and continued development of energy-saving and environment-friendly automobiles. These policies have indirectly pushed forward the maturity of the automobile market.
CCID Consulting believes that the “multi-polarization” of the global automobile industry will lead to a healthy development of the Chinese automobile market.
In 2006, foreign capital grew fast in China. All multinational groups have invested and built their second or third factories in China. Joint venture enterprises saw a big increase in their automobile sales. The elegant appearance and high oil consumption of U.S. brands, the excellent technology of German brands, and the high configurations and low oil consumption of Japanese and Korean brands have left deep impressions on people.
Domestic automakers in China have long adopted a strategy of “technology for market” to cooperate with foreign enterprises in an effort to improve their competitiveness. In fact, the year 2006 also saw China’s national brands start to step up their efforts. Different from the past, Chery, Geely and BYD Auto won more market recognition. FAW, Shanghai Automotive Industry Corporation (SAIC), ChangAn and Brilliance Auto also introduced their own new models and won considerable market recognition. In 2006, sales of national brands accounted for 26% of the total automobile sales in China, up 6% over 2005.
The table below provides a closer look at the top-selling vehicles in China in 2006, as well as how those vehicles’ sales compare over the past five years.
According to Linda Spencer, SEMA's director of international relations, "Small cars are growing in popularity with cars with an engine size of less than 1.6L comprising 60% of car sales. Rising oil prices, crowded conditions and an easing on temporary travel restrictions on cars with smaller engines on selected Shanghai congested roads has led to an increase in small cars. But luxury brands are also doing well. Mercedes had a reported 64% growth in January over the previous year, and Audi rose 32.5%. GM is also enjoying booming sales of its luxury brands such as the Cadillac STS."
Spencer continued, "The Chinese passenger car market is just in its infancy with just 0.73% of the population owning a car in that market. As China’s regional income disparities level out and a steadily growing middle class emerges with income to buy both personal vehicles and accessories, vehicle sales will further rise. In the first two months of 2007, sales of passenger cars rose 33%. GM was the brand leader, pulling ahead of VW."
To sum up the performance of China’s automobile market in 2006, technological progress, price marketing and the improved quality of services contributed to a great increase in customer loyalty among repeat car buyers, but Chinese customers are most often buying their first car. The “multi-polarization” of the global automobile industry intensified market competition in China. It will also lead to the healthy development of the Chinese market.
CCID Consulting forecasts that China’s automobile market will grow steadily in the future, but market competition will intensify.
Changes in market demand due to policy and social factors resulted in the following characteristics in consumption behavior in the automobile market in 2006: more private consumption of automobile, small automobile displacement and low oil consumption. Changes on automobile appearance fashion will continue to 2007–2009. As for product supply, sales volume in China’s automobile market will grow by over 10%, 2007–2009. By 2009, sales volume is expected to top 10 million.
For more information on the Chinese and other global specialty-equipment markets visit www.sema.org/international
Sources: CCID Consulting Co., Ltd. (April 20, 2007). “CCID Consulting Says the Sales Volume of China's Automobiles Will Reach 10 Million in 2009.” Press release courtesy of PR Newswire; SEMA