China is the world's biggest car market and still one of the fastest growing. Last year, 14.5 million cars were sold — about two million more than in the US. They went mostly to China's newly enriched middle class, most of whom have never owned cars before.
Although the recent growth spurt has slowed — last year, sales increased by just over five per cent — analysts predict the boom to accelerate once again. Some expect 30 million car sales by 2020. China is in the midst of the biggest industrial revolution known to mankind, and the car is at its epicentre.
There is still enormous room for growth. Car ownership,
at fewer than 50 cars per
1,000 people, is a fraction of America's (800), the UK's (500) or even Iran's (175). Little wonder that the world's motor makers covetously eye China and its 1.3 billion potential car buyers. Every major global maker has ploughed in, desperate to get a share of the world's richest car market.
"The winners and losers in the automotive business will be decided here in China," Jaguar Land Rover CEO Ralf Speth told me at April's Beijing Motor Show.
China is also the world's biggest manufacturer of automobiles. Last year, it made more cars than the USA and Japan combined. Yet foreign brands dominate. The best-selling nameplates are Nissan, Volkswagen and Toyota. Only two domestic manufacturers make it into the top ten — Chery (at number eight) and BYD (at nine). The local brands have less than 30 per cent of the market, and that's falling. The Chinese prefer foreign brands, and if it's German and premium, so much the better.
China is not like Korea ten years ago or Japan before that — the last big booming Asian automotive tigers. Japanese and Korean motorists were denied foreign cars until the indigenous makers got strong. In China, foreigners were encouraged to set up joint ventures to tutor the local makers.
The best selling foreign brand cars are locally made,
in collaborative ventures with domestic makers. Shanghai-based SAIC — best known in Britain for buying the dregs of MG Rover — collaboratively makes Volkswagen and General Motors cars. Dongfeng works with Nissan, Beijing Automotive with Hyundai, Brilliance with BMW. Chery
has just signed a deal to
make Land Rovers and
Jaguars in China.
Local Chinese cars are still about ten years behind the West. Of course, they will improve, but a big export thrust is not imminent. Geely, one of the likely shooting stars, has announced plans to sell in the UK, beginning early next year. Others will follow. But, for now, these are tentative steps.
The government, as always in China, has a plan. It wants to be the leader in electric car technology, and generous subsidies are available. The goal is to have 500,000 electric or plug-in hybrid vehicles on the road by 2015. Twenty-five cities were earmarked for an electric revolution, but progress has been very slow. At the end of last year, most of these cities had fewer than 100 plug-in cars. Just as Western governments desire more electric cars but consumers are reluctant to co-operate — because they will brook no compromise to their mobility — so Chinese motorists overwhelmingly choose petrol power over electric.
As with so many other national markets, the fastest growing sector last year was SUVs — up 20 per cent. Not even the all-powerful Chinese government, it seems, can control its car-buying public.
Gavin Green is a motoring journalist and consultant.
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