Outlook for Chinese auto market hot in 2010

　　Top1. Auto market will not be overdrawn in 2010.

According to expectations among ordinary people, a boom in car sales for 2009 will be likely to overdraw the auto market in 2010; however, most automaker executives seem to disagree. During Guangzhou Auto Show, Strait News has interviewed a great number of executives, who hold the opinion that the auto market will maintain blistering heat in 2010, besides, those, who expected the auto market will achieve an annual growth of between 15%and 20%, account for the greater majority.

Their expectations don’t come from nothing. Currently, a large number of manufacturers have already received orders for the first quarter of next year, as well as many new significant models will be launched to the market in 2010, which will be bound to stimulate consumer’s desire to buy.

　　Top2. Policies will keep playing a decisive role in auto market.

“Besides market factors, the car sales enjoyed a boom this year thanks to government incentives.” Most car dealers said so during the interview. As 2009 is drawing to an end, people began to doubt whether the incentives will continue or not. The decision, made at the executive meeting of the State Council on December 9, finally ended market conjecture: a 7.5% sales tax on vehicles with engines of up to 1.6 liters or less, effective from January 1 to the end of 2010; the subsidy program, vehicles going to the rural, will continue to the end of next year; the subsidies for trade-ins will be lifted to between 5000 Yuan and 18000 Yuan per vehicle. Certainly, the stimulus package will be effective in bolstering auto sales in 2010.

　　Top3. South China is an important and strategic post for automakers to fight for.

Due to the boom in domestic auto sales, smart automakers started to carefully plan for every area in China. As one of the most mature auto market, South China has been a strategic post for automakers to fight for. Before Guangzhou Auto Show, VW has released its “southern strategy”, aiming to increase its new vehicle sales volume 3 times: The sales volume will be lifted from 150000 units to 5000000 units. As for self-owned brand, such as, Chery, Geely and Lifan, their future market will focus on South China. What’s more, Shanghai GM, Ford China, Guangqi Honda have already increased their input; French automakers, such as, Dongfeng Citroen, Dongfeng Peugeot will place South China as a vital market to launch new models at the end of the year. South China has been the vital market for Japanese automakers, thus, the fighting for market in South China will climb to an interesting climax in the future.

　　Top4. Every new model wants to be a myth.

More than 20 new models will be launched in 2010, according to Strait News, among them, some new vehicles, drawing great attention, would reconstruct the present auto sales. With the price range down to 50000 Yuan and its slogan of the ideal family sedan for all people, the new Sail, introduced by Citroen, will cause quite a stir among economy cars.

Faced with the increasingly huge SUV market, the ascending domestic Audi Q5 and VW Tiguan would intense the furious competition in SUV market. Besides, some heavyweight models, such as, Buick Ecotec, Dongfeng Peugeot 408, are all coming fast.

　　TOP5. ‘The second wave’ surged in the subordinate cities.

China’s regional differences in the economic development, no matter from major cities or subordinate cities, even some minor cities; from developed ones along the coast to the rising central and western region; from prosperous cities to the emerging rural, have all pushed forward China’s economy in an unexpected way. The economic development has stretched deeply in China and lots of enterprises have benefited, including automakers. The developed major cities in China have contributed to the first golden decade in auto market during 1998 and 2007. Therefore, some subordinate cities with great potentials, which are of a large population and vast areas, are fully capable to assume the second golden decade.

　　Top6. Infinite orders are in contrast with limited production capacity.

Although the auto market was extremely hot in 2009, some automakers have never expected that infinite orders kept in contrast to the limited production capacity.

At the end of 2009, the vast majority of automakers had already achieved their objectives in advance that were established a year earlier. Further more, orders for hot sales have been placed to next march. During the interview by Strait News, some executives said with smiles: “the number of car sales in 2009 depended on our production capacity.” As for the limited production capacity, automakers spare no efforts to raise its efficiency, establish new factories, and even run the operation line above capacity. It seems that auto sales will not be a problem as a result of the hot auto market and government preferential policies. Bringing along the growth of production capacity to meet the market demand will become an unavoidable problem for decision-makers to figure out in 2010.

　　Top7.The confidence in a car purchase fluctuates with the oil prices.

Fuel consumption has been the key factor for people to think about, when they choose vehicles. Thus, those car-owners or potential consumers will be affected by the ascending oil prices. According to some experts, the international oil prices will move steadily upwards as the world economy revives. If the prospects of international economy are better than the prediction, the confidence in financial market restores and the inflation pressure increases, plus, USD continues to weaken significantly, the trend of soaring oil prices will be more and more obvious. The ups and downs of oil prices will make great impact on consumers, who care about the vehicle’s fuel consumption, and then vehicles with a small displacement would be their first choice.

　　Top8.Auto insurance by telephone

Compared with the traditional auto insurance, the low-price advantage, highlighted as a result of reduced channel agents, has become a pioneer of auto insurance by telephone to expand the auto market. As the market of auto consumption is getting mature, the competition in china’s market of auto insurance by telephone keeps upgrading. The latest figures show that the auto insurance market has been shared by about 11 insurance companies, such as, Pingan, PICC, CPIC and so on. Further more; the implementation of New Insurance Law will make great impact on auto insurance by telephone in terms of curbing vicious price competition as well as making service the key to win over the market. As to auto insurance by telephone in 2010, more and more benefits and convenience would become part of consumer’s great expectations. (Translator: qinghua Serena)

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