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Auto industry to sell 2.4M vehicles, grow 14% this year
(12 November 2001) China's auto industry is expected to grow rapidly over the next 10 years, according to a recent People's Bank of China (PBOC) report.
An analysis of the current status and development trend of China's auto industry was included in the PBOC's report on this year's third quarter monetary policies, reported the Nov.1 Xinhuashe (Xinhua News Agency).
The report said that China's auto industry has achieved two production breakthroughs since the 1990s—an automobile output exceeding 1 million vehicles in 1992 and topping 2 million in 2000.
According to the report, the auto industry's growth rate has increased along with production.Beginning with statistics from the second half of 1993, the
auto output's highest annual growth rate had been just 7.3 percent, with its lowest being 2.1 percent. By 1999, the growth rate had increased to12.3 percent and continued to grow to13 percent in 2000.
During the first nine months of 2001, auto production reached 1.9 million vehicles, a 12.9 percent increase over the same period last year. This year's annual growth rate is expected to reach between 14 percent and 15 percent, with the production of around 2.4 million cars.The report said that the Chinese auto industry has currently built a comparatively complete product series and production allocations, with domestically-made automobiles accounting for 95 percent of the national auto market.
The Chinese auto industry has also witnessed the development of several large enterprises, including the China First Automobile Group Corp. (FAW), Dongfeng Auto Group,and Shanghai Automotive Industry (Group) Corp.In its continuing effort to become the world's top manufacturer of motorcycles, China produced 7.2 million units during the January-to-September period, the article said.
Supply and demand
Since Chinese residents have a comparatively low income, economy cars have the highest sales volume. Sales of low to mid-priced vehicles account for 80 percent of total sales volume, with the lower-priced farming vehicles being especially popular in the rural areas. The report said China does not invest enough in its auto parts and accessories sector, currently only 30 percent of the entire auto industry. Thus, it has not developed far enough to be competitive in the world market. The report said that redundant auto production by a large number of small auto manufacturers is a very serious problem. By the end of 1999, there were 2,391 auto manufacturers throughout the country, among which 118 made whole cars, 546 refit automobiles, 136 manufactured motorcycles, 51 produced engines, and 1,540 made parts and accessories.
According to the government's plan, sedan production was to reach 1.1 million this year. The report said that the approved or built production capacity is at 910,000, with 16 enterprises reaching an output of over 10,000.Assets from the big three manufacturers, China FAW, Dongfeng Auto and Shanghai Automotive, account for 62 percent of the total auto industry. They also hold 71.8 percent of the market share and bring in 88 percent of the profit for China's entire auto industry. The report also said that industry has a continuing tendency to aimlessly start new auto projects.
The next 10 years
The report said that the 10th Five-Year Plan (2001 to 2005) would be a key period for auto industry development. By 2005, China would be able to produce 3.2 million autos,including 1.1 million sedans. Value-added products would reach 130 billion yuan (US$15.7 billion), or 1 percent of gross domestic product.Auto output is expected to satisfy domestic demand, and exports could produce 8 percent of total sales revenue. At the same time, motorcycle output would grow to 13 million, with its exports contributing between 15 to 20 percent of total sales revenue.The report expects auto consumption to rapidly expand while the auto industry undergoes large-scale integration over the next 10 years. Europe-based Roland Berger-Strategy Consultants conducted a survey regarding the next 10 years of China's auto industry.It included 10 complete-auto manufacturers and 90 auto parts and accessories suppliers. Roland Berger predicted that China's sedan market would reach a sales volume of 2 million vehicles by 2010, with private-use Sedans with 1-to-2 liter engines seeing the fastest growth.The survey further predicted that after 2010, the Chinese sedan market would be dominated by 3 to 4 large manufacturers that offer a complete series of sedans and target only a couple market segments.Roland Berger added that after large-scale integration, the total number of auto parts and accessories suppliers would be reduced by 70 percent. 
From ChinaOnline News
A Slow Ride to China
“Patience will pay off” could well be the motto of Frenchman Jean-Claude Germain as he makes his way every morning from Beijing's northeastern suburbs into the Kelun Building on Guanghua Lu. The words, though, have little to do with the traffic congestion he encounters on the way in. No, they relate to the sound temperament required to deal with the strange world of car manufacturing and car sales in China.
Nantes-born Jean-Claude is Citroen's Chief Representative in China. He's by no means a newcomer to the Middle Kingdom. Indeed, his contacts with the country began back in 1989. He stayed until 1992 and the signing of the joint venture deal with Dongfeng Motors in Wuhan, in Hubei Province. The Citroen ZX Fukang was the car which grew from this Franco-Chinese relationship – and sales of it have been steadily rising ever since the start of production in 1992. Last year, 53,000 Fukangs were made in China, compared with less than 10,000 in 1996.
And Citroen is not standing still. By the end of the year, it hopes to launch its Xsara Picasso model on the Chinese car-buying public. Forty per cent of the manufacturing operation will be locally integrated at the outset, growing to 90% in a few years' time.
One car that won't be made here but is being launched with the nouveau riches of China in mind is the Citroen C5. Jean-Claude positively glows as he highlights one of the C5's main attractions – its hydraulic or “hydractive” suspension. In layman's terms, this means the new car automatically adapts its height to the speed it is being driven at, and can even make a “comforting” adjustment on badly damaged road surfaces. Sounds ideal for the bountiful potholes on Jingshun Road.
Citroen C5 fans in China will have two options when it comes to purchase – they can buy the 2-litre 16-valve engine or the 3-litre V6 petrol engines.
And what price will you pay for the privilege of driving a new C5 on the highways and by-ways of China? Between 415,000 and 485,000 RMB – a far cry from the existing Fukang price range of between 110,000 RMB and 185,000 RMB.
“We're targeting the new middle classes, the people who own their own companies and are doing well,” says Jean-Claude. Germain. The absence of car loans in China means the purchasers of the new C5s will be heading to dealers with wads of cash in their shoulder-bags and paying for it all in the one visit.
“It's not like Europe and many other places where there is credit and finance available for people to buy cars. If there is one thing I would like to see happening in the car market here over the next few years, it is the introduction of car loans. Just think about it. Currently, about 630,000 cars are being sold here each year. That's the same as in Belgium, which has a population of 11 million. The latent potential in this market is phenomenal,” says Germain. He would also like to see some uniformity in the rules and regulations which apply to the auto industry across China. “From province to province, at the moment, there are so many differences. We need some national standard, some regulation of the market to facilitate growth,” he says.
A lot of these developments could take place as China finally grasps the nettle of membership of the World Trade Organisation. Then, the lingering protectionism – you need a licence to buy an imported car here and they are not easy to get – will gradually disappear and China will become a level playing field when it comes to the auto industry. In the meantime, Jean-Claude is perfecting the art of patience. Any attempt to draw him out about the frustrations of trying to do business in China are met with a knowing shrug of the shoulders.
“You have to play by the rules, and at the moment, they mean foreign car manufacturers can't own more than 50% of any operation here. If that changes, well and good, we will see what we can do,” he adds. And currently, Citroen would appear to be doing not too badly. Admittedly, the 14% target it set for market share last year was not met, but Germain says they'd be quite happy to grow their current 9% to 10% by year's end. Turnover in China last year, he says, was 76bn. RMB, and profit was 300m. RMB. “I'd prefer if that second figure was dollars but there you are, I am not complaining”.
Indeed, he isn't, and his philosophical outlook about the future suggests a quiet confidence that Citroen, like every other major car manufacturer with a stake in China, is waiting for the car market here to go into over-drive. A reward for patience may just be around the next bend for Jean-Claude Germain and his colleagues in Citroen.
By John Murray, Beijing Journal
Auto sales to leap next year
China's automobile market is forecast to have a total volume of up to 3 million units next year. According to Xu Changming, an industry expert from the State Information Centre, the forecast is based on an anticipated surge in auto imports stemming from sharp tariff cuts next year and on a continuous rise in the sales of domestic manufacturers as they are expected to decrease prices and are likely to launch more new models on the market. Xu said over the weekend that auto imports in 2002 would reach 200,000 units as China would slash its tariffs from the current level of 70-80 per cent to 43.8-50.7 per cent at the beginning of the year, the biggest cut after the nation's entry into the World Trade Organization (WTO). "The robust imports next year are expected to ignite a long-term and sustainable growth of the domestic auto market," Xu said.
Jia Xinguang, an analyst from the China Automotive Industry Development Research Institute, even predicted the imports in 2002 would amount to 300,000 units. China Trading Centre for Automobile Imports said imports during the first 10 months of this year nearly doubled to 64,600 units from the same period of 2000. Ding Hongxiang, the centre's deputy general manager, said the total imports would increase to 70,000 units this year from 42,000 in 2000. Ding attributed the increase largely to tariff cuts from 80-100 per cent to 70-80 per cent at the beginning of this year. Xu said sales of domestic automakers were expected to maintain a double-digital growth next year because they would further decrease prices and offer more new models to compete with increasing imports.
"The sales in 2002 are expected to jump up to 2.7 million units," Xu told China Daily. He said the total sales this year would reach 2.4 million units. China Association of Automobile Manufacturers said sales increased by 15.8 per cent year-on-year to 2.15 million units from January to November in 2001. Xu estimated that the prices of domestically made autos would on average decrease by 15 per cent next year. Signs indicate that many automakers in China will cheapen the price of their products next year. Shanghai Volkswagen -- a joint venture between Shanghai Automotive Industry Corp and German carmaker Volkswagen AG -- for example, has announced it will continue to take measures to cut the price of its products next year. The company already decreased the price of its old Santana car to 105,000 yuan (US$12,700) from 150,200 yuan (US$18,400) in 1995.
The Wuhan-based Dongfeng Citroen, cut the price of its 1.4-litre Fukang car to less than 100,000 yuan (US$12,000) for the first time last month. The new models to be launched on the market next year by domestic automakers include Polo compact car of Shanghai Volkswagen, Palio of the Nanjing-based Yuejin Fiat Co and Guangzhou Honda's Odyssey multi-purpose vehicle, which were on display at the recent Shanghai International Motor Show. However, Su Hui, general manager of the Beijing Asian Games Village Automobile Exchange, said he was not "very optimistic" for the auto market next year because many consumers would continue to postpone buying cars in expectation of cheaper prices after the WTO entry. China will decrease tariffs to 25 per cent by mid 2006, according to the WTO requirements.
China Daily News
SPARE PARTS GALORE FOR ALL VEHICLES
Like any marketplace, it offers a vast range of products and services of every description and price, allowing the customer to browse, haggle and –because of the cheek-by-jowl competitiveness between retailers-get the best deal possible. The difference is that this is Beijing's Siyuanqiao Automobile Parts Market, a vast conglomerate Aladdin's Cave of some 500 spare-parts shops and servicing/repair depots for virtually every make model of car from around the world. The market even boasts outlets run by the world's top five car manufactures, including General Motors, BMW and Volkswagen, and the giants of Japan, Korea, Britain and China itself.
Opened late last year and currently sprawling over 20,000sq.m of former waste ground to the east of the Asian Games Village on the Fourth Ring Road, the market will soon be increased in size by a further 5,000sq.m. Ultimately, it will cover an astonishing 86,000sq.m, including parking space for 20,000 vehicles, making it the biggest of its kind in China, if not the world.
“We supply everything to do with automobiles here, whether it's engine parts, tyros, stereo systems to bodywork cosmetics-anything you can name,” said Wu Baoqun, general manager of Siyuanqiao's management company, from whom the market's outlets rent their premises. “Countless individuals and companies also bring their private or fleet vehicles here for repair or regular servicing. Individual shops specialize in different makes of automobile. Foreigners, including embassy staff, who come here don't usually have a language problem, as most either brings a Chinese friend or translator. Some company people have their own local chauffeur.”
Mr. Wu said that before Siyuanqiao opened, most foreigners took their vehicles to the collection of garages and repair shops in Sanlitun (Bar Street).” But as news of our opening has spread, they are more and more coming here. I think Sanlitun is probably still all right for some kinds of repair, but the choice of spares and services here is so large that we‘re bound to attract customers from there. It's basically about choice, and Sanlitun could become too small. We are even getting vehicle-owners from other Chinese cities coming here.”
He was unable to confirm the specific amount invested by his company in setting up the market, other than that it was “ millions of RMB.” His firm chose the Siyuanqiao area for its good transport links and low impact on the environment. For example, it has no nearly residential properties whose occupants would be affected by noise.
The market has an added value for vehicle owners, in that an annual event-the first one was in March this year –will be a visit by teams of government experts who can distinguish counterfeit car parts from genuine. This exercise both discourages the market's retailers from selling inferior, possibly dangerous, spares, and reminds the public to be wary if offered cut-price item.
Siyuanqiao Automobile Parts Market, east of Asian Games Village, Fourth Ring Road, Chaoyang District .Tel:64393355
Les Charlton (Beijing Journal)
BMW
seeks
joint
venture
with
Brilliance
China
Chinese
automobile
buyers
that
pay
top
dollar
for
imported
German
BMWs
may
some
day
be
able
to
buy
locally
made
versions
of
their
favorite
car.
Dr.
Joachim
Milberg,
chairman
of
the
BMW
Group’s
board
of
management,
announced
in
Beijing
on
Oct.
26
that
he
had
submitted
a
joint
venture
proposal
to
the
State
Development
Planning
Commission,
according
to
the
Oct.
26
Sina.com.
If
approved,
BMW
and
its
Chinese
partner,
Brilliance
China
Automotive
Holdings
Ltd.,
will
have
permission
to
start
manufacturing
BMW
vehicles.
Dr.
Milberg
would
not
say
what
specific
model
the
joint
venture
would
produce,
but
observers
are speculating.An
assistant
to
Dr.
Milberg
said
that
the
BMW
3
Series
compact
sports
sedan
is
the
most
popular
BMW
sedan
in
the
world,
accounting
for
70
percent
of
the
total
BMWs
sold.
However,
most
BMWs
imported
into
China
are
the
more
luxurious
5
Series
and
7
Series
models."This
seems
to
suggest
that
the
joint
venture
would
produce
BMW
3
Series
in
China," the
Sina.com
article
said.
Other
evidence
suggests
otherwise
Yale
Zhang,
an
associate
with
Automotive
Resources
Asia
in
Beijing,
says
current
BMW
buyers
in
China
are
relatively
wealthy.
"It
is
this
(wealthy)
community
that
really
requests
cars,
and
they
will
request
the
better
cars,''
Zhang
told
the
Reuters
news
agency.
If
they
can
control
the
price
to
just
about
500,000
yuan
(US$60,410)
or
thereabouts,
that
market
will
still
be
there.BMW
will
do
it,
because
the
name
of
this
car
in
China
is
highly
respected,''
he
said.
BMW
3
Series
vehicles
sell
for
between
US$25,000-30,000
in
the
United
States.
The
BMW
7
Series,
on
the
other
hand,
is
priced
closer
to
US$60,000.Asked
whether
the
proposed
joint
venture
would
be
affected
by
Brilliance
China’s
Zhonghua
sedan
project—another
auto-building
plan
currently
under
review
by
the
government—Dr.
Milberg
replied
in
the
negative.The
Zhonghua
auto
is
a
medium-grade
sedan
that
is
being
developed
by
Brilliance
China
on
its
own.
As
an
independent
project
it
will
have
no
impact
on
the
proposed
joint
venture,
Dr.Milberg
said. Brilliance
China
Brilliance
China
(NYSE:CBA,
SEHK:1114)
is
an
auto-manufacturing
group.
Over
the
past
ten
years,
it
has
invested
over
5
billion
yuan
(US$603.86
million)
to
build
plants
that
make
engines,
auto
parts
and
complete
vehicles.It
has
joint
venture
projects
with
many
international
auto
groups
including
General
Motors
Corp.,
Toyota
Motor
Corp.Mitsubishi
Motors
and
the
Renault
Group.Brilliance
China
owns
51
percent
of
Shenyang
JinBei
Passenger
Vehicle
Mfg.
Co.
Ltd.,
a
company
that
controls
65
percent
of
China’s
minibus
market,
according
to
Sina.com.In
the
first
six
months
of
the
year,
Brilliance
China
reported
sales
of
3.26
billion
yuan
(US$394
million),
according
to
Yahoo!
Finance.
BMW
The
BMW
Group
posted
35.4
billion
Euros
(US$32
billion)
in
sales
worldwide
last
year.The
group
imported
4,663
BMW
vehicles
into
Hong
Kong
and
China
in
the
first
nine
months
of
2001."We
we
will
achieve
a
very
good
overall
sales
result
in
China
throughout
the
whole
of
2001—that
is,
well
over
5,000
units,"
Reuters
quoted
Dr.
Milberg
saying
on
Oct.
26."It is
our
objective
to
become
the
number
one
premium
manufacturer
also
in
this
country," he
said.
From
ChinaOnline
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