China Auto Industry

The China auto industry is classified as an emerging market. The Chinese motor vehicle market consists of passenger vehicles and trucks. Passenger vehicles consist of cars and utility vehicles. Trucks consist of mini trucks, light trucks, medium trucks and heavy trucks.

Market size of the China auto industry

The motor vehicle market including passenger vehicles and trucks stood at 4.44 million units in 2003.  The market grew by 35 percent in 2003 and 34 percent in 2002.  Out of the most rapidly developing nations, the China auto industry had the largest amount of sales, with the India auto industry seeing sales of only 1.17m units.  The US auto industry was the world leader, with sales of 16.93m units.  Meanwhile the Europe auto industry registered sales of 15.63m and the Japan auto industry had sales of 5.18m. Within Europe, the UK auto industry had sales of 2.94m units.

GDP and motor vehicle growth in the China auto industry

In 2003, China’s GDP, which was driven by exports and foreign investment, as well as steady household consumption was equal to that of France. The automotive industry, which is one of the Chinese Government's priorities, is contributing directly to this exceptional growth. Motor vehicle growth took off in 2002 after China’s accession to the World Trade Organization and its regulations stipulate that the Chinese government has to reduce tariffs on imported items to 25 percent in 2006 from nearly 100 percent before 2002. This legislation allows foreign players to enter the market and the subsequent explosion in car sales can be seen in figure 34 overleaf. Purchase full report here.

Vehicle ownership, at 9 per 1000 inhabitants, is low in China. This figure is well below that of other emerging countries. This presents huge potential for the world's big vehicle manufacturers who have already entered into joint ventures and alliances with the local manufacturers.

Passenger vehicle and truck sales in the China auto industry

The price segment of USD 15,000 - 22,000 for passenger vehicles accounts for 26 percent (539,388 units) of sales in the car industry.

This is followed by the USD 12,000 - 15,000 price segment, which accounts for 21 percent of sales, see figure 35. The majority of passenger vehicle sales in China are made in the cities, which account for a population of nearly 130 million. However, with increasing purchasing power, there is every possibility that rural and semi-urban populations, which form more than 80 percent of the total population, may start buying cars. Therefore, the entry-level segment that is USD 4,200 - 8,500 is likely to see increased sales in the period up to 2010.

China's changing customs and values, marked in particular by the growing proportion of passenger vehicles, are reflected directly in the segmented market trends. The small cars and the lower to mid-range segments (micro, sub-compact and sedan) are expanding fast and so are vehicle offerings, see figure 36 overleaf. A significant proportion of institutional purchases in the mid-size (sedan and full-size sedan) segment contributed to this growth.

The market for trucks in China stood at 1,229,600 units in 2003. The development of the rural economy stimulated the demand for light trucks, which grew by 29 percent, see figure 37.

The Chinese market for medium-duty vehicles continued to decline in 2003, with demand shrinking by 17 percent. With the highways system improving, transportation companies now find the traditional medium-sized vehicles to be less economical than the newer larger units. On the other hand, demand for heavy trucks grew by 3.62 percent in 2003.

Major players in the China auto industry

Volkswagen has a 34 percent share in China’s passenger vehicle market through its joint venture’s with Shanghai Automotive Industries Corporation and First Automotive works. Santana is the best selling sedan of Shanghai Volkswagen in China. Shanghai Automotive is the largest producer of passenger vehicles in China followed by First Automotive Works. Shanghai General Motors (see General Motors profile) holds a market share of 9.7 percent in the Chinese passenger vehicle market followed by Honda (see Honda profile) with 5.6 percent. Honda’s sales in China grew by 80 percent in 2003 to close at 116,625 units, see table 21 previously.

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