My Opera1080p definition China can't save the world: 2008 car sales growth slows.
Sunday, September 26, 2010 6:31:33 PM
After red-hot auto sales, China shifts into a lower gear. By Bertel Schmitt, CEO Sinamotive Group (HK) Limited.
What a difference a month makes. A few weeks ago, the big automakers still looked at China as a threat. When auto sales tanked last month in the U.S., and fell in Europe, automakers looked to China to save their numbers. China won't be able to make up for the losses in the West. According to statistics released by the China Association of Automobile Manufacturers, 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 in a country where double digit growth rates used to be the norm.
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 into lower gears doesn't mean that a saturation of the Chinese auto market would be near. China just started when it comes to cars. In 2007, the total number of vehicles in China was 57 million units. That total also counts 14.68 million three-wheeled vehicles and low-speed vans. As it stands, China's vehicle ownership per thousand populations is below 50. The number is 740 in the United States, and more than 500 in Europe. It will take a long time for China to reach saturation. Total world output is 69 million cars per year. Even if the whole world would produce cars for China only, it would take more than ten years bring China's market to saturation.
Author Bertel Schmitt is CEO of Hongkong, Beijing, and Hamburg based Sinamotive, a company specialized in sourcing low cost high quality auto parts in China. The company is backed by U.S. venture capital. Mr. Schmitt is looking back at a 30 year career as a marketing consultant to Volkswagen AG.1080p definition: tuner definition
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