China’s auto industry getting the sniffels.
The world is looking to China for strength. China is taking a breather. By Bertel Schmitt, CEO Sinamotive Group (HK) Limited.
When auto sales cratered in the U.S., and fell dramatically in Europe, automakers looked to China as their savior. China won’t cure the world’s ailments. Actually, it might get a bit infected. According to just released figures by the China Association of Automobile Manufacturers, passenger vehicle sales in China fell for a second month in a row in September, dropping 1.4% from a year earlier to 552,800 vehicles and heightening worries about a demand slowdown.
Still, sales of passenger vehicles in the January-September period increased by a healthy 11.4% to 5.1 million units. 2007 saw a rise of 21.8%. The September decline in passenger-vehicle sales indicates a full-year sales growth in the single digits. The decline came as a surprise, because September is usually a strong sales month in China, when consumers buy cars ahead of the Golden Week holiday.
The notable exception was Volkswagen AG. After lackluster sales in prior years, VW surprised with 772,783 vehicles sold in China from January to September, a 13% rise compared to the same period in the prior year. Volkswagen’s Audi luxury brand contributed strongly to the parent company’s sales. Volkswagen China plans to sell a million cars in 2008, an increase of 9.8% from the 910,491 vehicles in the prior year. According to a company spokesman, Volkswagen plans to sell more cars in China than in its home market Germany in 2008.
The pause in sales doesn’t mean that the Chinese auto market is saturated. Far from it. By the end of 2007, the total number of all vehicles on the roads of China reached 57 million units, up 14.3 percent from the year 2006. However, the total includes 14.68 million three-wheeled vehicles and low-speed vans. Currently, China’s vehicle ownership per thousand populations is below 50. The number is 740 in the United States, and more than 500 in Europe. China has a long ways to go before reaching saturation. Total output of the world’s automakers is rated at 69 million motor vehicles annually. Even if the whole world would produce for China only, it would take more than ten years to saturate China’s market.
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