World No 1 car market: China

A TV personality came to our office and interviewed us the other day. We were asked for some comments on car exports from Japan to China. We told them that there is huge demand in China and considering the needs in the market over there, we have many enquiries regarding exporting left-hand drive cars from Japan; but because of the import ban on the Chinese side, we cannot do so. Although on the actual programme, they cut bits & pieces, they conveyed what we wanted to say; so I guess it went OK.

Speaking about China, since last year’s subprime mortgage crises, even the Chinese economy has been greatly hit. However, they are recovering from it incredibly fast, a lot faster than other countries in the world. According to the latest report, the number of new cars sold in China in the first half of the year 2009 (between January and June) was a 17.7% increase from the previous year to 6.1 million vehicles and it was the world No 1 easily beating the USA (4.81 million vehicles).

The Chinese government announced car sales promotion policies such as big cuts in automobile acquisition tax for compact cars and handing out subsidies for rural people’s car purchases. As a result, private passenger cars especially compact ones have sold well at an increase of 25.6% compared to the sales of the year before.

In China, not many people use car loans unlike Europe and the USA. 90% buy them in cash. This could be the reason why the financial crises had minimum impact on their economy. In the USA etc., finance companies tightened their criteria for loans, which caused the chill in the market but in China they used cash so the effect only hit their psychology. The property and share prices and individual consumption in the country are all heading upward and the car dealers remain confident for sales in the second half of the year.

Toyota, struggling in sales in Japan, started offshore production of their sport SUV “RAV4” with their merged company in China. They are thinking about widening their car lines. Nissan Motors increased their sales in China by 18.9% to 540,000 cars, which is 1/7 of their world expected sales in 2008; and now they are increasing the line-ups of compact car ranges to increase their sales volume to 800,000 by the year 2012.

All Japanese car manufacturers are in slump now in the domestic market and are now looking at the Chinese market. Even in China, cars are not cheap. As in Japan, they cost 1-2 million yen each. It will be a few years income for the average Chinese person. They usually buy cars which are like 5 years income but to me it seems too much compared to their income and car prices. I guess there is status in owning a car in China and cars are selling well. Wait a minute: isn’t it amazing that people have a saving of 5 years income? We cannot underestimate their power, can we?


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(Editor)
JPC TRADE CO.,LTD.
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Japan Used Motor Vehicle Exporters Association (JUMVEA)
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