Car market in China show interesting development
Demand for luxury durables
Due to fast growth and rapidly shrinking middle class, luxury durables gain its popularity in China. In particular, car market in China is supposed to be the largest and fastest growing in the world due to increasing demand over the last few years. “Love for luxury” in China was one of the major contributors to fast growth of car market: luxury auto brands are highly popular in China. This trend leads to emerging of various centers and events, where cars can be purchased, including second-hand car shops, dealerships and exhibitions.
Car Market growth is slowing down
Rapid growth of car market in China is gradually slowing down though it is still considerable. According to China Association of Automobile Manufacturers, car market is expected to grow by 8 % in 2014 to 23.83 million units although the expected growth as at the beginning of the year was 10%. In 2013, industry growth was approximately 14% making Chinese car market the largest in the world, in which over 20 million cars were sold. Few reasons for that are suggested by market experts. Growth rate, forecasted for 2014, is the slowest since 1990, may result in lower demand for many consumer durables including cars. As Yale Zhang, Shanghai-based managing director of researcher Autoforesight Shanghai Co, mentions: “Commercial vehicles are more closely related to the economic situation. Usually, if there are not a lot of investments, the truck demand will be affected. If there’s no construction projects, truck demand will be lower.” Moreover, Premier Li Keqiang announced a “war” to pollution imposing restrictions on fossil fuel emissions and limiting a number of new vehicles. As Xu Haidong, director of the auto association’s trade coordination department, mentions: “We believe the economy hasn’t shown obvious signs of improvement in the second half. It’s hard to say whether more local governments will issue restrictions this year but this is definitely one of the risks we have to take into account.”
China host one of the biggest world exhibitions of cars
The most impressive and internationally recognized car exhibition is called Auto China and hold every two years in Beijing since 1990. It has recently been recognized as one of the four top world exhibitions along with Frankfurt Motor Show(Frankfurt), Auto Expo(New Delhi), and North American International Auto Show(Detroit). It shows the new power of car market in China. The recent exhibition was held from April 20 to April 29 2014 and hosted major world car brands including Mercedes, Kia and Hyundai. The exhibitors of 2014 included passenger cars and commercial vehicles manufacturers, auto parts and service parts manufacturers, the designing institutions of auto, the suppliers of auto decorative products and consumables, financial service institutions, trading companies of vehicles and related products, and media of auto industry.
As it is mentioned above, car industry in China is currently in a slowdown in China as market experts suggest. Due to slower economic growth, which affects incomes, and government restrictions of fossil fuel emission, car companies do not expect higher growth rate of the industry. On the contrary, it is expected to drop from 14% in 2013 to 8% in 2014. However, it does not suggest negative prospectus for car-makers in China. Economy is still growing bringing more and more middle-class consumers each year.
More market research on cars in China
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