Prospect of China’s Auto Market Development

Shi Tao, Excecutive Vice President of FAW-VW Automobile Co., Ltd.

China’s auto market has maintained a growth rate of more than 20% in the past few years and this year’s sale is expected to reach 12 million vehicles. China’s car market is unarguably going to be the largest one in the world.

Since passaenger cars make up 60 to 70% of the total auto market, the analysis of the passaenger car market can reflect the overall trend of the auto market. In 2008, the average car ownership is 20 vehicles per 1000 people. The market has just entered a spreading stage. The next 5 to 10 years is expected to witness rapid increase. According to international experience, the growth rate during a spreading stage averages 20%. The conservative estimate for Chinese market is a 15 to 20% growth rate.

Given the broad picture of China’s auto market development, the following factors will boost out confidence in China’s auto market.

First, domestic demand. Due to the changes in Chinese people’s lifestyle and increased distance in their trip, statistics demonstrate a rigid demand for cars. The process of urbanization has become a majoy driving force behind the grwoth of passanger car market. China’s auto industry is on a rising path.

Second, income level. The icrease of average per capita income has made car purchase possible.

Third, consumption pattern. Both full and partial down payment enjoy great market potential.