Although Chinese cities are beginning to implement car-buying limitations, China’s automobile sector remains a staple for growth. Further good news for foreign companies and investors lies in the fact that foreign automobile companies accounted for 91.8% of January sales.
On top of this, the Chinese government is actively looking to further open the Chinese automobile sector to foreign growth, citing hope that foreign management expertise and technology will spread to Chinese companies more effectively if foreign firms are given greater incentives to enter the market. Currently foreign firms must enter into at most a 50-50 joint venture with a Chinese company.
China is home to more than 250 million cars. Thirty one cities each host 1 million cars. Eight of these (Beijing, Shanghai, Guangzhou, Chengdu, Tianjin, Shenzhen, Suzhou, and Hangzhou) house more than 2 million cars. Beijing itself claims 5 million of the nation’s 250 million automobiles.
While five cities (Beijing, Shanghai, Guangzhou, Guiyang, and Tianjin) have established car-buying limitations and more cities are expected to join them in the future, China still has amazing growth potential. China has around 179 cars per thousand people. This ratio has grown dramatically since 2009, when it stood at 34 cars per thousand people. To further put this growth potential in perspective, the US boasts a ratio of approximately 800 cars per thousand people. Sales and production in China have ranked number one in the world for the past five years.
The top five brands in China rank as follows: Volkswagen recorded sales of 2.4 million units and the nation’s second most popular car (VW Lavida). GM recorded sales of 2.1 million units and the nation’s third most popular car (Buick Excelle). Hyundai-Kia recorded sales of 1.6 million units. Toyota recorded sales of 900 thousand units. Nissan recorded sales of 800 thousand units.
Other notable performers: Ford recorded sales of 700 thousand units and the nation’s most popular car with 403,000 sales of its own (Ford Focus), with the car itself seeing an increase of 36.2% year-on-year. Geely had the highest sales of any Chinese car brand at 600 thousand units. Chang’an’s sales increased by 77.38%.
The outlook on 2014 seems positive. John Lawler of Ford looks for the Chinese auto industry to increase another 7.5% to 8% this year, and Ford expects to beat the market’s growth. GM is expecting sales to increase 8% to 10% in 2014. Shi Jianhua, deputy secretary-general of the China Association of Automobile Manufacturers (CAAM) explained that China’s auto market is still in a period of rapid expansion, with growth gradually shifting to small-sized cities where demand is significant.
For those interested in the top Chinese brands, ranked by 2013 total sales: Greatwall at 627,434 units (increase of 28.72%), Geely at 553,128 units (increase of 12.55%), BYD at 506,189 units (increase of 10.99%), Chery at 423,200 units (decrease of 19.68%), and Chang’an at 409,600 units (increase of 77.38%).