China: Return to explosive growth predicted

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China became the largest automotive market in the world in 2009 while the US fell into recession. However since then, Chinese sales slowed from the strong double-digit growth of 2009 and 2010. This slowdown is about to be over, according to Ryan Cui, an analyst with LMC Automotive, who told China Daily passenger vehicle sales will rebound to 10.5% growth this year and a stable increase will continue in the next 4 to 5 years. Even more telling, LMC doesn’t foresee any chance of a decline, which is confirmed by Lin Huaibin from IHS Automotive who said that a falling market “is impossible” unless the nation’s economic fundamentals change.

Volkswagen unveiled the Cross Blue Coupe at the Shanghai Motor Show this year…

There are two explanations for this return to explosive growth.

First, even after a decade of extremely strong sales, still only about 67 of every 1,000 people in China now have a car. This is to be compared to 600 cars per thousand people in many European countries and 800 per thousand in America. According to Bertel Schmidt from The Truth About Cars, China’s car growth is directly connected to the economy and most car sales still are in cash, so Chinese consumers tend to save when darker clouds appear on the economic horizon. As business picks up in China, car sales should follow.

…while Ford unveiled the Escort concept at the same Show.

Second, the main foreign manufacturers present in China are ramping up production at unprecedented levels, adding over 3 million annual vehicles over the next 2 to 3 years! For example, by 2015 Volkswagen will have no less than 12 vehicle plants in China and Ford will have doubled its annual capacity to 1.2 million… See the detail by manufacturer below.

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