10 predictions for extraordinary China auto

According to Yangtse Evening Post, the glory of China’s domestic auto market has been described in the following words: 13 million units, an increase of 40%, the largest global auto market and so on. As 2009 is drawing to an end, its glory has been written into the new chapter in history. Whether it will be maintained, the pressure is added on Chinese auto market in 2010. As for the upcoming year, let’s altogether make predictions that the year of 2010 will be truly extraordinary for Chinese auto market.

　　Prediction 1

　　China auto market will maintain a double-digit increase in 2010.

Both automakers and dealers will have unchanged confidence and optimism over China auto market in 2010, among which most automakers even endeavor to achieve a 10% growth in their sales targets. The number of vehicle sales volume, 15 million units, seems to be unattainable, while it’s not difficult for Chinese auto market’s accessibility. If China auto market reaches a 10% growth in 2010, then the annual sales volume will soar to 15 million units.

However, still some conservative people believe that the booming domestic auto market in 2009 has overdrawn almost 2.5 million units from the year’s demand in advance. Thus, the domestic auto growth rate will not exceed a double - digit increase in 2010. Besides market factors, car sales enjoyed a boom last year, mainly thanks to government incentives.

　　Prediction 2

　　Trouble of purchasing vehicles may ease.

It seemed to be difficult for consumers to purchase new vehicles in 2009, as there were always no cars available in the stores. Quite a few car dealers have been suffering from such happy embarrassment as a result of an imbalance between supply and demand in China’s domestic auto market for a decade. Will this tension ease in 2010?

At present, almost every major automaker has released its expansion plan of production capacity. If these production capacities from different automakers are added together, then China’s annual production capacity will be expected to have access to 20 million units. Therefore, faced with the enormous production capacity expansion, short supply in China auto market will be relieved in 2010.

　　Prediction 3

　　Will car prices drop or go up?

Whether car prices drop or go up, it will mainly depend on automaker’s sales targets this year. After their expansion of production capacity and sales network, vehicle inventories will be ample in auto market. Therefore, the tension between short supply and great demand will be relieved and then the difficult situation will be alleviated, for example: there will be enough new cars available in the market, and consumers won’t have to pay extra to purchase cars. In addition, the possibility of the decline in car prices may increase.

Some industry insiders admitted that, more the difficulty in purchasing vehicles, the more consumers will purchase, according to consumer’s psychology. Nevertheless, if automakers are too optimistic over their production and sales volume, they will definitely add more pressure on 4s stores to ease vehicle inventories under the current model. In view of the situation, car dealers will probably drop car prices in order to bring along the growth of car sales, so that the competition between car prices will be intensified and the price war will break out in the auto market.

　　Prediction 4

　　How many new models will be available in auto market?

According to the statics released by China Association of Automobile Manufacturers, 221 kinds of domestic passenger cars were launch in auto market in 2009, a record high. However, most of them are modified vehicles, and the brand new models were less than 50 kinds as well as only dozens of best-selling models were in auto market. How many new models will be available in the market and who will create the new vehicle myth in 2010? Let’s just wait and see.

According to sources, 78 kinds of new models will be launched in 2010 and automakers will compete with each other for better performance. Some heavyweight models are drawing great attention, such as, Chevrolet New Sail, Buick Ecotec, Dongfeng Peugeot 408 and so on. At the same time, the competition between self-owned brand vehicles is getting intensified: BYD will launch 5 new models, such as, L3, I6, G6, S6, M6 and so on; other automakers like SAIC, Chery, GW, have already released their new vehicle plans, such as, Roewe 350, Riich G6, Hover M2... As 2010 is drawing, consumers will enjoy a variety of vehicle choices.

　　Prediction 5

　　Oil prices have already broken through consumers’ psychological defense.

Oil prices kept soaring at home and abroad in 2009 and the highest figure has skyrocketed to 7 Yuan/liter till now. According to incomplete statics, China’s domestic oil pricing was adjusted 8 times in 2009, 5 increases and 3 drops in oil prices. The accumulated annual growth in gas and diesel prices has respectively raised 1520 Yuan/t and 1390yuan/t, up almost 27% for both.

The current trend of international crude oil price remains unclear. If the figure soars to 150 USD per barrel, or 200 USD per barrel, then the corresponding domestic oil prices will skyrocket to 10 Yuan per liter. Thus, people’s psychological offense will be broken through significantly. According to industry insiders, oil prices will probably soar under the current situation. Therefore, when consumers want to purchase vehicles, they should take full account of future cost so as not to regret.

　　Prediction 6

　　Were the marriages between automakers happy?

The trend of automaker’s merger and acquisition sprang up in 2009. After looking on for one year, will Chinese automakers bring a new climax in domestic merger and acquisition in 2010?

The new surge of merger and acquisition has been lifted by Guangzhou automobile group, which has reconstructed Changfeng group and also joined hands with Fiat. Certainly, the trend of overseas acquisition has been swept over foreign countries. Sichuan Tengzhong purchasing Hummer has already been in the spotlight from home and abroad. Since then, some automakers have successfully tied the knot, such as, Beijing automobile group and Saab, Geely and Volvo. Marriages between automakers with different style have raised worries over their new production operation in terms of vehicle models. As the progress is stepping up, all those answers will be gradually unveiled. Let’s just wait and see.

　　Prediction 7

　　New energy vehicles will be more accessible.

How far away are new energy vehicles from people’s life indeed? This question has been given a clear answer recently. The new energy vehicle stimulus packages have been rolled out, including personal subsidies for purchasing vehicles, effective from 2010, due to be scheduled.

Another exciting news was the first batch of new energy vehicle owners will be born in Shenzhen in the first quarter of this year. They may purchase BYD F3 with a favorable price, only if their new energy vehicles would apply for driving licenses in Shenzhen. According to experts, as vehicle purchase subsidies will take effect, consumers will be expected to purchase new energy vehicles with preferential prices, owing to the vehicles highlighted advantages, such as, energy-saving, environment-protection, and better economic performance.

　　Prediction 8

　　Self-owned brand vehicles take aim at high end market.

Joint-ventured automakers, like Nissan, Hyundai, Volkswagen, GM, will launch new generation vehicles in 2010, when they have found vehicles with small displacement are in great demand in Chinese auto market. Therefore, if self-owned brands would like to occupy the auto market, what they need to do is to enrich their product series, enhance product images and aim at high end products.

Government stimulus packages have boosted self-owned brand vehicles to march towards high-end market. Chery has succeeded in pulling their G5 into the north circuit of the Nurburgring. With the glory of purchasing Volvo, Geely has launched its hatchback, Emgrand EC7-RV. Furthermore, BYD has launched the involving electric vehicles and its first high-end vehicle, G3 as well.

　　Prediction 9

　　The subordinate city market has to speed up.

Recently, a great number of automakers have released their 2010 business plans. According to those automakers, such as, Dongfeng Nissan, Guangqi Toyota, Dongfeng Citroen, and Dongfeng Peugeot, it is not difficult to find out that they are expanding their auto market in some domestic suburb cities, as well as establishing more new sales outlets there.

What’s more, automakers will keep enhancing their product sales and after-sales services in the subordinate markets, and bringing along more marketing activities. The market in subordinate cities will play a role to propel the growth of domestic auto market. According to automakers and dealers, the new booster, the auto market in subordinate cities, will be the great hope and prospect of China’s domestic auto market.

　　Prediction 10

　　Second-hand auto market will enjoy a boom.

According to the universal rule, second- hand auto market is usually lagging behind the new cars market. It is expected that second-hand auto market will boom in 2010. Industry insiders analyzed, second-hand auto market will be expected to welcome its first blowout in 2010, with a great-leap-forward in growth. The market scale will reach a new level of 4 or 4.2 million units. Besides, the growth rate will soar to a new record of double-digit increase. (Translator: Qinghua Serena)

　　See original Chinese report pleases click