China's auto market sees long-term growth ahead

• Source: CE.cn
• [09:10 December 28 2010]
• Comments

So, what factors should be paid attention to in China's auto market in 2011?

In 2011, China will enter the Twelfth Five-Year Plan period. Zhang Xiaoyu, Executive Vice-President of China Machinery Industry Federation, pointed that the future 10 years would be a period for China to grow from a large automaker to a strong auto industry country.

The growing of China's auto industry from large to strong is not simply an increase of quantity, but the enhancement of quality. Dong Yang, Standing Vice-President of China Association of Auto Manufacturers, believed that in the period of Twelfth Five-Year Plan, the expansion of China's auto output and sales scale would provide powerful support for the independent renovation of China's auto industry. Therefore, in 2011, we should pay attention to the increased quantity as well as the quality when we take account of the development of China's auto industry.

It should be seen that China's sales of passenger cars have grown by 6 million in the past two years, and the whole auto industry has grown by near 9 million. Such a great growth needs an adjustment and recovery, which are the necessary guarantee of the healthy industrial development. However, in the process of rapid growth, practically all automobile manufacturers are expanding productivity, pursuing the market growth rate over than 30 percent.

Once the market comes back rational growth, the large-scale productivity expansion will be confronted with fierce challenges. According to relative statistics, in 2010, the productivity utilization ratio of domestic auto manufacturers reached 88 percent, even in some joint-ventures, the ratio reached 100 percent and above. While in 2011, the productivity utilization ratio may decrease by 10 percentage points. The consequent price competition and storage challenge will both influence the car-makers' own development strength and outlook.

Jia Xinguang believed that, for auto manufacturers, the key issue in 2011 will not be speed but benefit. The core will be how to take measures to reduce the cost, including comparatively large operations on enterprises, because under the low-speed market conditions, they can't counteract the cost increase with growth.

At last, we should see that the auto industry development will do favors to the stimulation of consumption and better life level of common people. Car abandonment and second-hand car exchange are helpful to energy conservation. Meanwhile, the rapid growth of China's car consumption also brought some grave challenges, such as the influence of gas emission on air pollution and traffic pressures brought by the increase of auto population. The consequent problems emerged with the arrival of an auto society will all impact on the growth trend of China's automobile industry.

As to these issues, Chang Xiaocun, Director of the Department of Market System Development of the Ministry of Commerce, pointed out: "In the period of Twelfth Five-Year Plan, as to policy orientation, on the one hand, we should exert the stimulation of auto consumption on consumption expansion, meet the ever-growing needs of auto consumption, tap and fully release the auto consumption potential. This is a positive guidance. On the other hand, we should make some limitation of the auto consumption, e.g. we should strengthen the concept of low-carbon economy, lead the green consumption and standardize the consumer behaviors."