Car Sales Surge in China

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The world’s largest market for automobiles

Streetscape, Hong Kong, China

Streetscape, Hong Kong, China

It comes as no great surprise that China is now the world’s largest market for automobiles, and presumably, automobile financing. After all, with more than 1.3 billion people, its population is now more than four times that of the United States.

What’s startling, however, is the rate at which China’s automobile sales have increased. According to, passenger-car sales in China surged 98 percent last month, and  have increased by more than 50 percent in each of the previous five consecutive months.

J.D. Power revises its estimates, big time

According to global-marketing researcher J.D. Power and Associates, by the end of the year, China’s 2009 automobile sales will total 12.7 million automobiles, a 44 percent increase over sales in 2008. By comparison, sales of just 10.3 million automobiles are forecast for the U.S. in 2009. As recently as two years ago, J.D. Power predicted that China’s automobile sales would not surpass those of the U.S. until 2025, and earlier this year it forecast sales of just 9 million vehicles in China for 2009. The updated forecast puts China 3.7 million automobiles and 16 years ahead of schedule.

Causes and effects of increased Chinese sales

China’s recent surge in sales is attributable to its tax cuts and stimulus program as well as the depressed American market. Following a significant downturn in auto sales late last year, the Chinese government cut taxes on small cars and spent $730 million on subsidies for SUVs, minivans, and pickups. Truck sales were boosted by stimulus money for the construction industry, as well.

Pollution in China is likely to become even worse

Although the number of vehicles on the road in China is skyrocketing, it’s only a fraction of the number in the U.S. China’s fleet of automobiles is newer and its emission standards in big cities are higher than those in the U.S., but enforcement of standards is lax and harmful emissions increase as vehicles age. Recent research at Harvard University suggests that the fuel now being supplied to China is not of sufficient quality to meet the country’s heightened emissions standards.

Fuel demands in China are likely to double in the next 10 years

Most analysts agree that demand for crude oil has peaked in the U.S. Although the price of oil along with tax hikes on gas-guzzling vehicles have encouraged Chinese consumers to shop for gasoline-efficient, battery-powered, and alternative-energy cars and trucks, according to the World Energy Outlook (a study conducted jointly by the Organization for Economic Cooperation and Development and the International Energy Agency), China’s demand could more than double before 2020. As it stands right now, China is the world’s third-largest importer of crude oil, surpassed only by the U.S. and Japan.

Chinese design principles may have a worldwide influence

It would seem to follow that as the Chinese buy more cars, they will have more influence over vehicle design in other car-buying nations. Already, General Motors had a Chinese team design the 2010 Buick LaCrosse, which sells better in China than the U.S., using feng shui principles and designs inspired by Chinese art. The Buick is considered a luxury car in China, and one of the design features of the new LaCrosse is a sumptuous back seat suitable for Chinese business executives with hired drivers.

Chinese design vs. Chinese conformance to American tastes

American investor Warren Buffett is a financial backer for Chinese automaker BYD, Ltd. Buffett’s vote of support for BYD may help China’s sales grow so large that Chinese-designed cars are sold globally. But the expansion of China’s middle class may turn out to be an opposing force, as Chinese consumers begin to conform to the consumer preferences of the U.S. and other influential car-buying nations.

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  1. Limousine Hire Perth on

    I like to visit this good post. This post sharing a well information for the china auto car market. The recent surge in sales in China is due to tax cuts and stimulus package as well as the U.S. market downturn. Following the end of last year, car sales dropped sharply, the Chinese government cut taxes on small cars.