Car Sales in China Will Increase to 13.55 M in 2015

But Experts Warn the Market Could Overheat if Production Stays on Target

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BEIJING (AdAgeChina.com) -- Car sales in China, including SUVs and minivans, are expected to grow from 8.7 million units in 2009 to 13.55 million in 2015 -- an increase of more than 55%.

The Chinese vehicle market is currently the world's largest, but government officials and industry experts warn the market may overheat as car makers ramp up production capacity

"China's rapid growth makes the automotive market highly attractive and almost irresistible to any automaker," said J.D. Power's John Humphrey, senior VP of global automotive operations in Westlake Village, Calif. "However, for many brands, achieving their profit aspirations in China in the coming years will be far more challenging."

By 2015, more automotive brands--at least 90--will compete in China's passenger car market, than in any other country in the world. That's at least twice as many car brands as in the U.S. And by 2015, more than 300 models will be produced in China, and hundreds more imported.

The industry is ripe for consolidation. But that's unlikely to happen because rival provincial governments, eager to drive local jobs and tax revenue, compete to defend their rocal automotive makers and suppliers.

Consumers outside the heavily-populated tier one cities will become an important source of growth. And figuring out which of the many tier two, three and even four cities to target for expansion will be critical. Finding good dealers will add to the challenges.

While foreign automakers will still hold an advantage by 2015 in engineering, manufacturing and quality, the gap with domestic automakers will start to close. Chinese automakers will be more aggressive in their relationships with foreign joint venture partners, especially in the areas of product strategy, distribution and marketing.

Among the 13.55 million cars forecast to be sold in China in 2015, approximately 57% will be sold in the lower-margin subcompact and compact car segments, where consumers will hve more than 125 models to choose from.

In comparison, only 22% of passenger vehicles forecast to be sold in the U.S. in 2015 are forecast to be subcompact and compact models, while 57% re expected to be higher-margin luxury car, SUV, pickup and minivan models.

Source: J.D. Power and Associates


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