Six Predictions for Auto Market in 2010

The following six events will take place throughout 2010.These issues will represent six keywords of the main features of the entire auto market next year. Therefore we will make six predictions. We hope that some of them may be proven to be true, while others are incorrect.

　　The Contradictions of Policies

Although there is no final official confirmation at present, several signs have shown that a series of polices including purchase-tax cut and promotion of auto sales in rural areas which were issued in 2009 will continue. Government officials have said publicly that those policies played an obvious role in boosting demand and promoting the structural adjustment. Automotive industry has become the biggest player to save China's economy.

Due to the financial crisis, the automotive industry in several countries across the world has suffered from poor performance. In contrast, China's auto market enjoyed the outstanding landscape. As we all know, it is the huge amount of population and the vast second and third tier markets that propelled the development of auto sales. However, no one will ignore the effects of policies. The policies are just like a turn-on button which is used to start a car.

The data has shown that the policies have strong power to guide the automotive industry. According to the policies, the purchase tax of 1.6-liter and smaller vehicles will fall to 5% from 10%. In the market of passenger cars, which is a fastest-growing sector, the sales of 1.6-liter and smaller cars accounted for 69.89% of the total volume. After the policies aimed at promoting the sales of cars and motorcycles in the countryside were issued, the mini-car sales soared in the short term with the help of financial subsidies and purchase-tax cut. According to the China Automobile Industry Association's statistics, the mini-car sales rose 67% in the first eight months in 2009, well above the year on year growth rate of passenger cars. During the same period, the passenger-car sales rose 37%.

In fact, China's auto consumption has been benefited from the policy guidance for a long time. Since October 2000 the policies have pointed out clearly that China would promote more families to have cars. Since then the taboos related to auto production and auto consumption have been gradually abolished. Private companies can produce cars and people can use loans to buy cars. A golden age of China's automotive market began to arrive. As to current situation, China's consumer market of automobiles has been cultivated to a strong one, which will become more mature. Market has become the protagonist in charge of all orders, while the policy is a catalyst for the market. Only when policy and market have the same beat can we embrace a "resonance" effect. The performance of auto market in 2009 offered a positive interpretation of such "resonance" effect.

At this end of the year, the rise of oil prices has drawn countless people's attention. Though the life with a car is extremely happy, it is very practical as well. Looking back, we know that even without the policies small and mini cars will also become a popular choice for the public. In the same way, even without the needs of environmental protection, automakers will invest heavily in the development of new -energy vehicles. All of those things were driven by the market. But the appearance of car is like opening a Pandora's Box. The car brought people more convenience and happiness as well as pollution, traffic accidents and traffic jams. As early as many years ago, some scholars warned that if every Chinese people had a car this country would become a big parking lot.

China's annual sales of cars in 2009 will be over ten million. This question has again been thrown out once again. There are more and more cars and the traffic situation across the country is deteriorating rapidly. Needless to say, Beijing and other big cities are faced with severe problems. Due to the rapid development of auto consumption, the traffic problems appeared in some second-tier cities. If a car accident on the highway is not handled in time, it will lead to a terrible traffic jam which may affect dozens of kilometers.

So what should we do to deal with the conflicts brought by the growth of auto consumption? Most people are saying that China should encourage auto consumption and restrict the use of vehicles. That is the simplest and most direct solution.

However, there are different views that the solution of traffic jams in cities lies in the integrated management. Government can build more roads and subways and advocate public transportation. Authorities may also raise the parking prices in central area, collect congestion fees and implement other fiscal measures. In Japan, Tokyo has established a comprehensive and clear urban-road information system, which can inform drivers of the traffic situation in various places in time. We should know that the amount of vehicles in Tokyo is more than twice as large as that of Beijing. In short, we can resolve the traffic problems through technical means.

The famous historian Arnold J. Toynbee once raised a well-known theory: human civilization is moving forward with meeting challenges and tackling them. For Chinese people who are lack of a sense of freedom, vehicle is an important tool to improve their lives. All of the policies should defend people’s happiness and get ready for the challenges in the future. (Qinghua/Hanxin)

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