Motorsport companies keep constant watch on the growth of automobile sales in China. Currently, there are very few race circuits – in Beijing, Shanghai and near to Hong Kong only. However, as car sales rise, and incomes allow leisure spending, it is expected interest in competition – whether rally or race – will grow.
It seems clear that the absolute number of cars in use, as opposed to per capita sales, will be a good indicator of possible uptake in motorsport. This excellent article from Just-auto provides some interesting comparisons and insights which may have some value to motorsport development.
Extracts from a recent article in www.just-auto.com
With the world’s economies in turmoil, China’s star continues to rise.
Indeed, China has remained the only one of the world’s major economies that continued to show growth through the global recession of 2008-09.
In this extract from a just-auto research report looking at the Chinese auto industry and its prospects, Mark Bursa considers the causes of continued - and seemingly inexorable -
market growth.
China has certainly not been immune from the global crisis – many consumer goods are produced there, such as computers, mobile phones, cameras, white and brown goods –
and as the global economy tumbled, so did demand for such items, leading to factory closures and layoffs in China. In 2008, car sales growth in China slowed to a single-digit
rate for the first time since the turn of the century.
There is clearly scope for growth.
Car ownership, currently, is just 2.9% of the population, according to Credit Suisse – one of the lowest rates in the world. The bank expects ownership to surge fivefold to reach 148 cars per 1,000 (15%) residents by 2020.
By contrast, the 2007 car ownership level in the US was 940 cars per 1,000 residents (94%), and in Western Europe it was 584 per 1,000 (58%).
The automotive market in China is different, in that most of its output is still for domestic consumption. Exports have grown, but are still focused on emerging markets, as Chinese
cars in the main still fall well short of the ever-tightening safety and emissions standards demanded in the west. This has isolated the automotive sector from the collapse in global
demand.
It has only taken some government sales incentives to kick the growth curve sharply upwards in the latter half of 2009. As a result, China ended the year as the world’s largest
car market, ahead of the US – several years ahead of when most analysts predicted this would happen.
Government stimulus takes effect.
Propelled by Government incentives, vehicle sales in China reached a record 13.6m units in 2009, the China Association of Automobile Manufacturers (CAAM) reported, well above the organisation’s earlier target of 10m. That took China to an undisputed number 1 position globally, more than 3m units ahead of the US, where 10.4m cars and light trucks were sold in 2009, the lowest level in 27 years. The Chinese total also includes about 650,000 heavy vehicles.
The SAIC-GM-Wuling joint venture sold the most vehicles last year – 976,800 – ahead of Shanghai Volkswagen (728,200), Shanghai GM (708,400), FAW Volkswagen (669,200) and Beijing Hyundai (570,300).
Passenger car sales in 2008 rose 7.27% to 6.76m vehicles, though sales fell heavily toward the end of the year, according to CAAM.
The Chinese Government’s incentive package included a purchase tax cut to 5% from 10% for cars with engines smaller than 1.6 litres, and a scrappage incentive that gave one-off cash rebates totalling US$732m to owners of older vehicles who trade them in for newer, more fuel-efficient ones.
The government also said it would set up an RMB10bn (US$1.4bn) fund to promote new technology, including renewable energy, over the next three years, while supporting the
eventual mass production of electric vehicles.
As a result of the short-term measures, February 2009 total vehicle sales, including cars, buses and trucks, rose 25 percent year-on-year to 827,600 units, taking sales past the
800,000 level for the first time since June 2008.
China overtook Japan in 2006 to become the world’s number two automotive market.
The ‘cash for clunkers’ scrappage scheme in the US, has to some extent stimulated the US market bybringing forward around 1.1m sales. Earlier forecasts, based on the first two months of 2009, that the US market would plunge below 9.6m.
Chinese passenger car sales in 2009 reached around 8m units, up 40% on 2008.Indeed, China’s auto sales surpassed the US market for all but two months in 2009.
The strong Chinese numbers have been boosted by government subsidies, including a reduction in the purchase tax from 10% to 5% on automobiles with engines smaller than 1.6 litres and subsidies from rural sales.
CAAM forecasts that the Chinese vehicle market will grow a further 10% in 2010, which would take it to 15m units. Merrill Lynch Japan Securities supports this projection, claiming the Chinese market will grow to 15.5m vehicles in 2010.
Growth drivers
It’s easy to see why the Chinese market is growing so quickly – personal wealth is increasing, and the number of families that can afford a car is rising rapidly. Analysts set the entry level for car ownership at an annual income of around US$5,000-6,000.
Initially, this meant growth has mainly taken place in the major cities such as Beijing and Shanghai. But now wage levels in smaller cities such as Xian and Chengdu are reaching
the benchmark level, and this trickle-down effect is likely to continue.
Johan Willems, vice president of GM International Operations (GMIO), said: “Today, the large majority of car sales in China are in tier-one cities like Shanghai, Shenzhen and Beijing, each with some 20m people. Fifteen other cities are in tier two in the 10m range.
“We are not even speaking about the tier-three and tier-four cities where people are just starting getting ready for a car, where there is an enormous possibility”
Mark 'Coolbear' Bursa
Taken from www.just-auto.com
