China is currently the global leading auto market. At a time when the other BRIC auto market drivers Brazil, India, and Russia are struggling to regain momentum, China remains the powerhouse for the global automotive sector. China has literally grabbed the mantle from the mature markets in a relatively short period of time.
It seems like not many years ago that China had far more bicycles than cars. Now, a country known for massive factories also has a rising middle class currently getting behind the wheels, as brilliantly detailed in Peter Hessler’s recent book Country Driving: A Chinese Road Trip. After a fitful start for the automotive business in China during the Republican era, the first Chinese automobile factory opened in 1953 a few years after the Communists took power. At first the factory only manufactured military vehicles and commercial trucks. The first Chinese car, a luxury Sedan, was produced in 1958. The industry stalled for almost two decades until the late 1970s.
The 1980s policies of market reform led by Deng Xiaoping allowed Chinese and foreign firms to partner in joint ventures and produce cars for local consumption. Private car ownership was no longer condemned as bourgeois capitalist behavior, but rather was seen as an enviable goal. The domestic and export markets both saw steady growth from that point onwards. Entry into the World Trade Organization in 2001 also provided an important boost.
According to HIS Automotive, Russia’s new car sales have been on the decline. India on the other hand, suffering from high interest rates and ever increasing fuel costs, is facing decreasing car sales after enjoying about years of continued growth. Brazil has had more or less constant sales this year according to HIS.
The China automotive industry has been in the limelight for quite some time now. The country has by no means been sailing on a bed of roses with slowing growth and challenges in recent years, but despite the Chinese economy’s hiccups, the automotive industry has been experiencing strong continued growth.
According to the Chinese Association of Automobile Manufacturers (CAAM), China sold about 11 million vehicles in the first half of this year. Multipurpose vehicles, cars and sports utility autos sales have been increasing gradually since the beginning of the year.
This growth in Chinese automotive business is attributed in large part to the low pricing strategy. China’s economy has been gaining strength leading to stable inflation, according to the country’s National Bureau of Statistics. The China automotive industry was earlier affected by government imposed restrictions on vehicle registration to curb pollution and traffic congestion in the Chinese cities.
China is emerging as a winner after suffering heavy blows and competition from already established auto industries. The U.S was initially the world’s number one auto market, but in 2009, the Chinese government brought in a stimulus package, and this helped the country overtake U.S as the leader. The introduction of new car registration quotas, meanwhile, contributed towards retardation of the auto industry in China, indicating that demand would be even higher if not for restrictive government policy.
For the last ten months, starting in February 2013, China’s auto sales have been increasing gradually. The Japanese firms which had maintained the better share of the Chinese market have been hurt by the territorial dispute between the two states and the ensuing Chinese nationalist demonstrations and anger over Japan’s purchase of some of the disputed islands.
On the biggest sales list so far include Ford Motors Co. while Toyota and Honda still record the highest sales of Sedans. General Motors, Chinese’s largest foreign owned automaker in China, also saw an increase in its sales in October 2013 by selling large numbers of its Buick and Wuling autos. With increased output and inflation staying put, the automotive industry’s trajectory in China can only continue to heighten.
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