Trouble of Purchasing Vehicles to Ease

China's auto market continued booming during the end of 2009. In most cases Customers had to pay for extra fees when they bought cars. Sometimes consumers may possibly find that no car was available and purchase became quite difficult. In view of this situation, Cui Dongshu, the Deputy Secretary-General of Joint Association of Passenger Cars received the interview with Sohu Auto.

Sohu Auto: At present consumers are faced with difficulties in purchasing new vehicles. When will this problem ease?

Cui Dongshu: The sales market has been soaring since March 2009 and the supply can hardly meet the demand. As a result, consumers may find it difficult to get the car instantly.

We can expand production capacity by establishing new product lines or overtime work. Overwork is the simplest way. Since the second quarter Manufacturers have extracted all the conventional production capacities. Employees working in automakers have suffered from physical and mental fatigue. They need to have a good rest during the Spring Festival. The establishment of new production capacity and production lines will take a quite long time. We are unable to expand production capacity in a short time via this way.

The most direct reason for the difficulties in purchasing new vehicles is that inventory is not enough. The booming sales in December further drained the inventory in dealerships and manufacturers. The inventory should be equal to the sales for one and half months. Then the difficult situation will be alleviated. As to some popular models dealerships only have half-month inventory. In order to increase the inventory, dealerships have to accumulate the vehicles for a quite long time. March and April are usually a surging period for auto sales and the accumulation of inventory is quite slow. The difficult situation will not be effectively alleviated in the first half of 2010. Since the third quarter the purchase of new cars will become much easier.

Sohu Auto: As to the issue of prices, will there be more substantial concessions in 2010? When?

Cui Dongshu: The current level of fare concessions may have been diminished. Due to the relationship between supply and demand, manufacturers cannot effectively deliver concession to consumers. In 2010 the preferential treatment will gradually emerge after March. When the shrinking preferential returns to normal level, the incremental effect based on price concessions will emerge. There is a close link between preferential margins and supply and demand. Since the third quarter in 2010 the preferential treatment will be gradually increased.

Since the market in 2009 is quite hot, some models delayed the upgrading process. A large number of upgraded models will be introduced in September. The old models are expected to be attached with more preferential margins.

Sohu Auto: In terms of specific segments in auto market, will a large number of new models of MPV enter the auto market? Will the capacity shortage of SUV be solved?

Cui Dongshu: Next year's car market is still good, while the MPV market is relatively normal. The market share of MPV will not be significantly improved. With the improvement of export market, MPV enjoyed an excellent performance since 2002. However, due to the downturn in export market, MPV suffered from a crisis in 2008. Export-oriented economy once boomed with a rapid pace. Currently the recovery process is quite slow after a severe crisis. Therefore MPV is unable to get rid of a tough situation. Although there are more new models in the past two years, those cars made little contributions to the recovery of MPV. (Translator: Qinghua/ Hanxin)

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