Frowns in Berlin, smiles in Beijing

• Source: Global Times
• [08:35 October 19 2009]
• Comments

"Compared to earlier developing countries like Japan in the 1960s or Korea in the 1980s, the growth of the Chinese car market is still relatively slow," said consultant Naumann. According to his analysis the necessary annual available household income for buying a car is around 65,000 yuan ($9,520).

"This can be seen right now in fast growing provinces like Inner Mongolia," Naumann said, "because of all the infrastructure projects in regions like these, the people are making one of the largest profits from the enormous stimulus package given by the government. In terms of percentages, these provinces have stronger income growth than Beijing or Shanghai," said Naumann.

"Regardless the car sales there right now, you can see already big jumps."

The German automakers want to save themselves a big slice of the pie. Audi and its joint venture partner FAW just celebrated the opening of a new construction plant in Changchun, Jilin Province where the new compact SUV Q5 will be produced. In March, Volkswagen mapped out a major China expansion and plans to invest 4 billion euros ($5.94 billion) in China at least until 2011 and is planning to double its vehicle sales to 2 million by 2018 by expanding its portfolio and dealer network. Ellinghorst thinks this goal "seems to be more too conservative than too high."

The auto sales growth rate will only slow next year when the national subsidies are not longer available, predicted Naumann. After that he predicts an annual market growth rate of 15 percent for the next five years. "China wants to drive in the fast lane," he said.