Booming auto sales in China are offering huge growth potential to the largely saturated global car market, says a report released by the Beijing Representative Office of the Standard & Poors Ratings Services on Thursday.
"We expect an average growth in car sales in China of at least 10 to15 percent a year over the medium term," said Standard & Poor's credit analyst Maria Bissinger, author of the report entitled "Dream Machines: Emerging Markets Beckon The World's Carmakers".
This will be supported by growing purchasing power in China, in which currently fewer than 10 in 1,000 people of a driving age own a car. GDP is forecast to grow by 5.2 percent per year in China between 2006 and 2020, said Bissinger in the report.
Every major international manufacturer is now present in the Chinese market, the report says. As well as imports, international automakers are increasingly setting up local assembly and production plants, generally in conjunction with domestic joint-venture partners.
Germany's Volkswagen, the first foreign carmaker to enter the Chinese market nearly two decades ago, still narrowly retains its leading share. It is followed closely by General Motors Corp., which currently has six joint ventures, and is increasing its production capacity, the report writes.
Bissinger said the Western automakers' move east is changing the landscape of global auto production. Although three-quarters of vehicles are manufactured in the three key production regions of North America, Western Europe, and Japan, China has now overtaken the Republic of Korea and France to become the fourth-largest auto manufacturer in the world.
The report concludes that as the new Eastern markets eventually consolidate, the strongest domestic players will be best placed not just to anchor their home market positions but also to put pressure on Western markets through exports and the establishment of production capacities, as indicated by Chinese automakers' plans to build plants in Eastern Europe in the next five years.
(Xinhua News Agency March 17, 2006)