China' auto market poised for steady growth in 2011
In recent years, China's auto industry has been developing drastically with the output and sales achieving leap-forward growth. Prices of vehicles generally maintained a tendency of steady decrease, and private car purchase got hot quickly by means of the increasingly improved consumption environment and rapidly decreased prices. Especially in the past two years, China's auto market has made new highs in terms of output and sales for several times supported by relevant industrial policies. China's auto sales volume has ranked first in the world stably for two successive years.
According to the latest statistics issued by CAAM, China's auto output and sales volume both breached the number of 18 million in 2010, being 18.2647 million and 18.0619 million respectively, increased by 32.44 percent and 32.37 percent year on year. These numbers have refreshed the global records of auto production and sales, and won the first again in the world.
Facing such an excellent market prospect, how will China's auto market develop in 2011? Will it continue the rapid growth or slow down and become stable? According to analysis, the latter is more possible.
As a whole, the rapid growth of auto market in 2009 and 2010 mainly rests with the promotion of the state's encouragement policies, while the degree of the growth has exceeded the expectation as well. As known to all, the global automobile industry was badly stricken by the international financial crisis in 2008, leading to the badly destroyed automobile industry in the world. In the situations of deteriorative global environments, intensified domestic competition and stagnant market, China properly launched a series of encouragement measures in an attempt to stimulate consumption, such as cancellation of road toll, old-for-new-service of cars, automobile going to the countryside, 50 percent off of purchase tax of cars, etc.
As a result, the growth rate of China's domestic auto market was over 40 percent and 30 percent in 2009 and 2010 respectively, being the quickest one globally. We know that a mature market may exist with moderate surplus of production capacity, so as to realize the survival of the fittest through overall market competition. The market should be adjusted by further applying its own development laws, thus keeping the market vital. Related intervention policies will be helpful to the short-term market development, but maybe not helpful to the long-term and sustainable development.
Based on the fact that the macro-control policies have obtained or even exceeded expected effect, it is unlikely that those encouragement policies to be expired by the end of 2010 would be continued. For this reason, there appeared the "last policy train" effect in the market recently that has not been seen in former years. In the same way, the auto sales kept growing in the year-end without large price-reducing promotion, and many people even lined up to buy autos.
Judging from current circumstances, certain overdraw effect will appear due to the quick release of short-term and immediate consumption demands. Besides, the cancellation of preferential policies will also slow down the increase of needs for cars to some extent, while most car types in the market are short in the capacity and can not meet the needs, so the warehousing pressure of manufacturers will not be very high in the first quarter of 2011. In addition, the uncertainty of market and unclear policies will lead to the comparatively careful price adjustment by manufacturers and dealers; this will not strongly stimulate the consumption. Therefore, we think the car market will grow slower in the first half of 2011, and the possibility of negative growth in some month can not be ruled out. After the second quarter, influenced by the supply-demand relation, intensified market competition, launch of new car types and other factors, the consumption demands will be released by the price promotion. The market will grow faster in the last half of the year. The ratio of market sales volumes between the first and last halves of the year will be 4.5: 5.5, or 4:6.
