China’s Car Market – Globalisation and Consolidation

As we head into 2011 its worth taking a quick peek at the state of the world’s fastest growing automotive marketplace. China has a target of more than 50% of vehicles sold in the country to be domestically produced by 2015, the most recent annual figures from 2009 show that over 44% already are so this isn’t a dramatic shift rather a reflection of the desire to become more and more self-sufficient and to begin focusing the economy internally in parallel with the current external economy.

One of the most amazing things about China’s current production is that there are over 130 companies in the country producing motor vehicles! Most of these of course are small scale operations, with sales and orders of fewer than 10,000 units annually. There are five big players already established from these 130 with sales in excess of 1 million cars per year.

As the market matures it’s almost certain that the industry will follow an established pattern from more mature market places, and begin a process of consolidation.

There have already been moves in the last couple of years with companies like Chang’an Motor Corp making moves for (and taking over) two small minivan producers. Chang’an is the country’s fourth largest producer and also represents Ford as part of a global partnership arrangement.

The Guangzhou Automobile Group Corp, found themselves buying a minority share in a Shanghai based SUV manufacturer and moving on to become the 6th biggest manufacturer of vehicles.

The expectation of policy makers is that these and other similar deals will lead to a highly consolidated automotive sector by 2012 with potentially 2 or 3 mega groups representing, 5 or 6 massive manufacturers all with sales in excess of a million units per year.

Traditionally the globalisation element of China’s car sector has involved partnership deals with major manufacturers from around the world, with China producing old models under their own brands. This is likely to change as the sector begins to flex its financial clout and hard-earned experience, with the takeover of Volvo by the Chinese Geely group indicating how much the global financial crisis has benefitted local firms.

There is already speculation that an unnamed buyer from the country is in negotiation for the now defunct Hummer brand and is likely to resurrect it using the city of Dalian (which is pursuing local government investment in large scale auto manufacturing) to focus on the luxury sector in China.

There’s no doubt that the next year or two will be one of the most interesting periods of the development of China as a major player in the automotive sector not just domestically but also globally.

they can help with the import and export of cars to China as well as working with the larger motor trade to provide specialist help on sourcing spare parts, linking companies in the business looking to break into China with investors and local partners and developing existing or future dealerships in the country. bugatti chiron for sale

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