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21.2.11

China Car Market - Sales Rising Despite Restrictions


Everyone involved in China's car market now knows about the restrictions in Beijing regarding the registration of new vehicles. Credit Suisse even went so far as to issue a report predicting a downturn in sales of nearly 16% if other cities followed suit. However once again the doomsayers have been proved wrong and in fact new vehicle registrations in the country have once again broken all records.

Initial statistics on January's total sales seemed to tell a different story, early releases showed sales of 1.15 million cars in the month which would have indicated a down turn on the previous month but still a significant upturn on January 2010 where these numbers would have shown an increase of 17.9% on the previous year.

These figures were not the complete story and this week the China Association of Automotive Manufacturers (CAAM) released the official numbers for the month. This showed that 1.89 million cars were sold in the country in January; this was a significant upswing even over the preceding month where sales had received a significant boost from Beijing buyers looking to beat the new regulations.

Not only are these figures a new record in a market that is continually smashing records but they firmly establish China as the number one automotive consumer in the world. General Motors then confirmed this by formally announcing China as their number one most important area eclipsing even the US, terming the country as the "crown jewel of their empire" and setting out plans to increase both their product range and manufacturing for Chinese consumers.

That doesn't mean that it's all good news for companies and the local company BYD, formerly seen as a rising star of domestic auto production, is not having such a good time. Despite serious foreign investment in the business led by Warren Buffet, they are having a hard time selling their models which are no longer seen as serious competition by other manufacturers.

To combat this BYD have announced a series of price cutting measures on their F series cars, cutting up to 15,000 RMB off the sales tag of each model in the range. Whether this will be enough to clear a mounting backlog of vehicles from their dealer forecourts only time will tell.

There's no escaping that China will continue to be the biggest success story in new car sales for a long time to come, with a population steadily growing richer and with cultural values that give much "face" for buying a new vehicle the sky really seems to be the limit at the moment.


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