Future Trends in Chinese Automotive Market

Talking about automotive in China is completely different from other countries, in most of the world you imagine automotive as a fierce market with no margins based only on volumes and sales strategy to keep the current volume and survive at least. In China automotive market is an emerging market with big growth ratio every year. Last year chinese passenger cars and commercial vehicles market grow about 40% and currently China is the biggest market for automotive worldwide. Predicting trends for the future is not easy but there’re some trends that surely will go on strongly in the near future:

1. Growth: the growth rate will be quite surely always double digit. It’s easy to understand why. Only 1 over 7 Chinese has a car, so the internal market is huge and moreover China is growing double digit as country so more and more Chinese will afford to buy a car, especially in the rural province where the rate is much less than in big cities like Shanghai and Beijing, where on the opposite the market will slow down also because cars needs first roads and infrastructure and big cities are becoming already overloaded in these years.

2. Consolidation: there’re still more than 100 car manufacturers in China and a lot of local small suppliers. Like in Europe and US it is expected a consolidation in the market. Probably automaker with volumes around 10.000-100.000 cars/year will disappear but it’s a slow moving consolidation, since Chinese internal market needs low prices for cars and so a lot of small automakers with only internal production of the whole car with a few technologies can give low prices, even though this means also low quality because the assembly lines of these automakers are still completely manual. Labour cost increase and general welfare will lead to an higher end demand and to the dissolving of most of these small automakers. As well as the same will happen for the small low quality suppliers.

3. EV: EV stands for electric vehicles. Since China has a lot of problems connected with pollution, EV is surely a trend that will grow. Remember that the biggest electric batteries suppliers worldwide are located in China and most of EV vehicles are being developed in China starting from these suppliers. Remember that the biggest electric batteries supplier, BYD is also a car manufacturer and someone like a certain Warren Buffet is a shareholder of the company.