Sunday, January 15, 2006

China Now World's Second Largest Auto Market


In another indicator of China's rapid economic growth, the People's Daily reports that China has now surpassed Japan to become the second largest automotive market in the world. According to statistics issued by the China Automotive Industry Association (CAIA), China's auto sales were close to 5.92 million units in 2005, surpassing Japan's sales of 5.8 million to rank second in the world behind the United States.

The People's Daily reports that China's auto market continued to maintain a stable and fast growth last year, with total domestically-produced auto sales growing 13.54 per cent over 2004. Nearly all of the over 5.9 million units sold in 2005 were produced in China with auto imports only totalling 160,000.

According to the China View, the top three auto companies in China are all domestic companies with First Automotive Works (FAW), Shanghai Automotive Industry Corporation and Dongfeng Motor Corporation taking the top three market share positions with 983,100, 917,500 and 729,000 cars sold in 2005 respectively.

Green Car Congress reports that sales of vehicles in China from GM and its joint ventures jumped 35% in 2005 to 665,390 units. GM ended the year with an estimated Chinese market share of 11.2%.

According to the People's Daily, the passenger vehicle segment is driving overall industry growth with over 3.97 million passenger vehicles sold in 2005, a surge of 21.4 per cent over the previous year.

Despite the massive growth in the passanger vehicle segment, the People's Daily reports that slight negative growth for commercial vehicles appeared, likely influenced by the business cycle, oil price hikes and policy factors. China's auto market is now driven solely by passenger cars, instead of the previous "duoservo forces" of passenger and commercial vehicles. Statistics show commercial vehicle sales were 1.787 million units in 2005, down 0.75 per cent from 2004.

The Chinese auto industry has seen abosultely staggering growth in the past few years. The current sales figure of 5.92 million units in 2005 is more than double the 2001 sales total of 2.731 million units! Now clearly an integral part of the worldwide auto market, China's auto market growth accounted for 23.2 per cent of the total global growth, according to the People's Daily.

The People's Daily reports that the CAIA expects that the Chinese auto market to maintain a 10 to 15 per cent growth in 2006 with the year's auto sales reaching between 6.4 and 6.6 million units.


It seems to me that considering figures like this, it will only be a matter of time before Chinese-branded cars start appearing on U.S. streets.

The massive surge in passenger vehicles (and total vehicles) in China is becoming a major contributor to the country's growing greenhouse gas emissions. It also belies a rapid increase in petroleum consumption that ought to give the U.S. pause to reconsider their oil addiction. With another major economic power with a rapidly increasing thirst for oil on the scene, it seems clear that we ought to be securing domestic energy supplies (most preferably clean, renewable supplies of energy) and making a push to more efficienctly utilize that energy. If we don't, we will likely be looking at increasing competition for dwindling worldwide supplies of oil which will mean higher and higher prices and likely increased risk of geopolitical conflict.

On a slightly better note, at least China has adopted European standards for auto emissions, not the lax standards the U.S. has. If they had adopted our standards, things would be quite a bit worse - for China, the U.S., and the world.


[A hat tip to Green Car Congress]

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