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China Car Industry Slow Down

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BEIJING, China (Nov. 18) -It’s a fact that China’s automotive industry has slowed, but the numbers are still considered astronomical. After a peak of 75 % growth in 2003, China’s auto production was marked at about 12 % last year, said Wayne W.J. Xing, Ph.D., who facilitated a panel discussion at the recent AAPEX Show […]

BEIJING, China (Nov. 18) -It’s a fact that China’s automotive industry has slowed, but the numbers are still considered astronomical.

After a peak of 75 % growth in 2003, China’s auto production was marked at about 12 % last year, said Wayne W.J. Xing, Ph.D., who facilitated a panel discussion at the recent AAPEX Show in Las Vegas.

“Do we see a bubble in the market? Not really. That’s an amazing growth rate if you compare it to any mature market in the world,” said Xing, president of market consultant firm China Business Update, who’s also publisher of China Automotive Review magazine, set for a January launch.

With approximately 300 million families, representing 1.3 billion people, China is undoubtedly the world’s last and largest emerging auto market; 5.1 million units of automobiles were made in China in 2004, said Xing.

China’s vehicle population is markedly different from other countries, according to Xing. Many residents drive three- and four-wheel vehicles that are classified as farm equipment, and motorcycle and bicycle use is ubiquitous.

Moreover, about 700,000 Chinese are still using animal-pulled vehicles as a means of conveyance.

With farm trucks added to the mix, China’s automobile production will likely surpass that of the U.S. by 2010, he added.

Passenger cars in China are mainly for “institutional” use, with many vehicles purchased by the government for taxi and fleet purposes, said Xing. The Chinese consumer market is largely made up of motorcycles and farm vehicles, but even that trend is shifting, he continued.

Also at the presentation, Judy Li, an editor for CAR and China Business Update’s annual directory, shared the somewhat dire state of Chinese parts distribution.

“Sales and distribution (in China) is in disorder,” she said. The lack of independent wholesalers, combined with the high costs of what are referred to as dealership services, are some of the symptoms of China’s distribution channels.

Li said the future of China’s aftermarket will likely include the increase of multinational companies, as well as the emergence of chain stores and “auto part marts.”

The Chinese government mandates that vehicles be scrapped after 15 years, but that could change with time, opening up more of a used car market and aftermarket, shared panelists.

China also lacks a proper salvage parts business because of vehicle scrappage laws, another fact expected to change in coming years, they added.

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