China’s auto industry getting the sniffels.
The world is looking to China for strength. China is taking a breather. By Bertel Schmitt, CEO Sinamotive Group (HK) Limited.
When times were good, the big automakers looked at China as a threat. When auto sales plummeted in the U.S., and fell in Europe, automakers looked to China to save their bacon. China won’t disappoint. But it can’t save them all. Sales figures just released by the China Association of Automobile Manufacturers, say that passenger vehicle sales in China fell for a second month in a row in September. They dropped 1.4% from the same period in the prior year to 552,800 vehicles. There are worries about a demand slowdown.
Sales of passenger vehicles in the January-September period rose a respectable 11.4% to 5.1 million units. However, the September decline in passenger-vehicle sales foretells a full-year sales growth in the single digits. 2007 saw a rise of 21.8%. The decline was ominous, because September is usually a strong sales month in China, as consumers flock to showrooms to buy cars ahead of the Golden Week holiday in October.
Volkswagen AG was the hero. After so-so sales in prior years, VW sold 772,783 vehicles in China from January to September. This amounts to a 13% rise compared to the same period in the prior year. Volkswagen’s Audi luxury brand contributed most. Volkswagen China plans to sell a million cars in 2008, which would translate to an increase of 9.8% from the 910,491 vehicles in the yedar before. According to VW’s Finance Director, Volkswagen plans, for the first time in history, to sell more cars in China than in its home market Germany in 2008.
The shift from red hot sales to a more sedate tempo doesn’t indicate a saturation of the Chinese auto market. When it comes to cars, China just started their engines. By the end of 2007, the total number of vehicles on China’s roads was 57 million units. However, the total includes 14.68 million three-wheeled vehicles and low-speed vans. Currently, China’s vehicle ownership per thousand populations is below 50. The number is 740 in the United States, and more than 500 in Europe. The world’s automakers produce 69 million cars per year. Even if the whole world would stop and make cars for China only, it would take more than ten years to saturate China’s market.
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