General Motors Co., Volkswagen AG and Honda Motor Co. are on the same page when it comes to envisaging the passenger car sales in China. According to the leaders, China's passenger car sale is expected to shoot up by around 10 per cent next year, with much role played by first-time buyers. Thus, in that case the future of the Chinese market seems to overshadow the current trends in the market.
If GM, the largest overseas car maker in China, is to be believed, car sales will proliferate by 10 per cent next year, whereas Volkswagen, Honda and Nissan Motor Co. claim as much as 10 per cent growth. Sales in China experienced a 5.9 per cent hike in the first 10 months of this year, according to the China Association of Automobile Manufacturers.
The carmakers have projected a positive estimation regarding the pace of car sales amidst words of caution from Chinese Vice Premier Wang Qishan over the global recession that may jeopardise the economy. As a matter of fact, the vehicle sale has been quite lax this year, following the omission of sales-tax breaks and incentives, along with increasing borrowing costs to control demand.
Seiji Kuraishi, Honda’s Head of China Operations, said at the Guangzhou auto show that “Customers are finding it tougher to get loans now and dealers are facing issues as well. At the same time, demand from central and western parts of China is still propping up demand for passenger cars.”
The auto association is expecting a less than 5 percent ascend in the sales of passenger and commercial vehicles across the country in 2011. In view of such an outcome, the expansion rate would surface out in its most discouraging form since the last 13 years. The People’s Bank of China upped the interest rates five times and revised the lenders’ reserve-requirement ratios on nine occasions since September 2010, in a bid to check the frenzied inflation.
The current world economic situation is critical, Vice Premier Wang said at a financial work meeting in the central province of Hubei.
Han Weiqi, a Shanghai-based analyst at CSC International Holdings Ltd reiterated that “Any major economic headwinds next year will affect auto demand. Auto makers will step up incentives to promote their cars next year and demand for commercial vehicles may recover.”
Low levels of ownership and rising incomes will help in boosting the sales of passenger cars, said Karl-Thomas Neumann, Chief Executive Officer of Wolfsburg, Germany-based VW’s China unit.
VW, Europe’s largest auto maker, is likely to surpass 2 million deliveries in China this year and would further work upon doubling the production capacity by 2015. The producer of the Jetta sedan and Tiguan SUV sold 1.89 million vehicles in the first 10 months, which indicates a hike of 15 per cent from a year earlier.
Thus, the Chinese auto market is expecting a productive time period ahead. However will the projections turn into reality seems to be a million-dollar question, in view of the depressing economic conditions prevailing in the country.
