Car sales growth set to slow in China

07 January 2010

BEIJING: The Chinese automotive sector is unlikely to replicate the dramatic expansion it enjoyed in 2009 over the course of this year, JD Power & Associates the marketing information services firm, has predicted.

According to JD Power's estimates, the auto industry's rate of growth in the world's most populous nation could slow from around 50% last year to just 5% in 2010.

Within this, Volkswagen, the biggest player in the domestic market, will witness an uptick of 5.5%, shipping 1.53 million cars overall.

Ford is set to register growth of 6%, while General Motors could post a small decline, after these firms saw respective increases of 50% and 67% over the last 12 months.

Both companies have indicated that they could launch new models this year, and further investment in Chinese capacity is also expected, reflecting the strain last year's record sales put on supply chains and logistics.

Nigel Harris, a Ford executive, commented: "We're pretty bullish about 2010 ... and China's potential in years to come."

Nissan, which is among the top five marques in the rapidly-growing economy, delivered an improvement of 44% in 2009, and purchase rates should rise by 16% this year, to 600,000 units.

Kimiyasu Nakamura, president of the Dongfeng Motor Company, a joint venture between Nissan and the Dongfeng Group, said: "China is a very important part of Nissan's global strategy. It is as indispensable a market for us as the US."

Chrysler, which has a less substantial presence in the country at present, will see totals fall from 16,000 to 12,000 vehicles over the forecast period.

Around 13 million vehicles were sold in China during 2009, beating US sales by around three million units, with the Beijing authorities cutting sales tax on small cars from 10% to 5% last January as a stimulus measure.

The tax has been raised to 7.5% this year as general economic conditions pick up.

Carmakers are expected to offset the steep slowdown in China, and declining annual sales in both Western Europe and Japan, with a stronger performance in territories such as the US, where growth of 12% is forecast for 2010.

Data sourced from Wall Street Journal; additional content by Warc staff