Shanghai, China – It’s amazing to think that just five years ago, car industry experts were predicting that the Chinese automotive industry will be outselling the U.S., Europe and Japanese car markets by the year 2015.
Well, thanks to the explosive economic boom that China has been experiencing the past few years plus the global economic depression that has severely hit those three major carmaking bodies, it’s practically 2015 already. In the first quarter of 2009, China sold more cars than the world’s largest car market, North America. China has already been outselling Europe, Japan and Korea for a few years now.
China was the first to show signs of improvement from the devastating industry downturn that began in the middle of last year, thanks mostly to effective government incentives to encourage new car sales via tax cuts and rebates.
China halved retail taxes on small cars this year and will fund up to 5 million yuan in vehicle subsidies for rural areas. Due to the economic downturn, 2007 saw the slowest growth of the Chinese automotive market in 10 years. Still, it was enough to post 9.38 million new car sales, a 6.7-percent increase compared to 2007. In contrast, U.S. car sales plummeted by almost half for the same period.
The Chinese car market even reached a monthly record of 1.11 million units sold last March, 34 percent more than the previous month and 5 percent compared to March 2007.
At the rate it’s going, China looks set to break the 10-million-unit threshold (a 9-percent increase) and overtake the US as the world’s largest car market for 2009.
And nowhere was this more evident than in Auto Shanghai 2009, the Chinese automotive industry’s biggest motor show – and one that is poised to become the next major global auto show after Frankfurt, Detroit and Tokyo.
Case in point: While established automakers like Nissan, Mitsubishi, Suzuki, Porsche, Ferrari, Land Rover, and Rolls-Royce were conspicuous by their absence at last January’s North American International Auto Show in Detroit; and Volkswagen, Ford, BMW, Chrysler, Mercedes-Benz, and General Motors reportedly skipping the Tokyo Motor Show later this year, they all had huge, full-model exhibits at Auto Shanghai 2009, which ran from April 20 to 26.
A total of 918 cars – 316 international and 602 domestic models – were on display at the show, with no less than 13 major models making their international debuts. The fully enclosed show occupied floor space roughly equivalent to 30 football fields.
“China remains one of the centerpieces for GM,” said Nick Reilly, president for General Motors Asia Pacific. “GM needs to be an industry leader in China if it wants to remain a leader in the global auto marketplace,” he added.
On its 5,000-square meter exhibit, GM unveiled 37 vehicles and concepts, including one international debut and five Asia Pacific debuts. It flew in its groundbreaking Chevrolet Volt electric car, which is set to hit the market next year.
“From a long-term perspective, the local market will continue to grow by between 7 and 9 percent over the next five years,” Reilly said. The Detroit-based company sold 363,701 vehicles in China in the first quarter of 2009, a 16.8-percent increase from last year.
Earlier this month, GM announced plans to double its China sales to more than 2 million units in the next five years. Interestingly, its models there are badged as Buicks rather than Chevrolets.
Top Chinese carmaker and GM joint-venture partner SAIC Motor displayed an electric car developed in-house as well as a hybrid version of its Roewe sedan, expected to hit showrooms next year.
Other Chinese carmakers that showcased impressively large exhibits with technologically up-to-date models included Chery, BYD Auto, Geely and Great Wall Motor.
BYD Auto and Geely showcased electric and hybrid concepts, in addition to a growing array of higher-end luxury models. The latter even showed off a Formula One car concept, demonstrating the Chinese automotive industry’s technological capabilities. And very timely too, as the Chinese Grand Prix was held the Sunday before the start of the show.
Just how did China pull off this seemingly improbable feat when its much more mature foreign rivals failed? Two seemingly simple government measures: vehicle subsidies and support for vehicle financing.
By providing subsidies to rural buyers of light commercial vehicles, China managed to address three goals: support for the growth in vehicle demand, support for the development in rural areas, and support for the indigenous vehicle manufacturers.
In effect since March 1, the new policy had an immediate impact on the Chinese automotive industry. A dramatic rise in wholesale vehicle deliveries of light commercial vehicles resulted as dealers anticipated a strong response to the policy and stocked up on inventory. Volume jumped to 293,000 units – up by a whopping 50 percent compared to the previous year.
In addition to stimulating vehicle demand, the Chinese government is taking strong measures to shape said demand. Hit by high oil prices last year, Beijing moved to adjust its consumption tax last September. By reducing the tax on small displacement engines and raising the tax on bigger engines, the government encouraged the same of smaller and more fuel-efficient vehicles. In addition to the revised consumption tax, the purchase tax was reduced for engines below 1.6 liters.
Look for China’s passenger car demand to grow fastest in the small car segment, with manufacturers focusing more attention and development on fuel efficiency and alternative propulsion technologies in the coming years.
Yes, the sleeping giant is well and truly wide awake.
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Here are a couple of extremely observant Backseat Driver reactions to last week’s “Everyday Highway Heroes”…
As great your story is, a question comes to mind on the Christian values a great majority of our people have. Many are not wanting to do good! It is just that many also choose not to be involved!
If only a great majority of our people follow the good tenets of Christian values, perhaps we would not be in a situation such as where we are now where corruption and greed is the tale of the day!
These feel good and real life stories should be broadcast every day and printed at the front page of every newspaper in the land! Our media should dedicate a space and time, be it in print or broadcast media for everyone to know that such deeds are not forgotten and are actually rewarded not at the time of doing the action but in some other time where recognition is much sweeter and wholeheartedly felt!
There are many out there who have done good unto others and refused rewards in the same manner as what our good friends did and these should be emulated by the many others for doing so is the great Christian spirit that can be uplifting to our spirits and moral values! – papelito
These people are what we call the modern day Good Samaritans. Being an optimistic person that I am, I believe that there are still many out there that are like these people, the modern day heroes. Not just in the highway but in some other parts of the country as well.
But like what papelito said, it is just a matter of not getting involved. All of us have good hearts but the problem sometimes is, we don’t have the TIME. It is very hard to help someone when you’re in a hurry to get to an important meeting. But if it’s a life or death situation, expect that help will be there in no time. – kEnshinxXxhiMuRa
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