Chinese Car Market Growth Expected to Slow to 10%

As all good things must come to an end, the Chinese auto industry’s recent growth spurt might slow to a crawl in the upcoming year. This comes as a result of the government’s incentives coming to an end.

A report by J.D.Power predicts the total number of vehicles produced in China might top 18 million this year, 30 percent more than in 2009. However the company expects only a 10 percent growth in 2011. China is rapidly becoming the world’s biggest car market, but the government is concerned with the problems caused by the over-rapid growth, including traffic congestion, environmental pollution and the automakers' over expansion, argued Zhu Ming, analyst with J.D. Power.

"Even if the capacity utilization rate is under 75 percent, Chinese self-owned brands could still keep earning, so domestic automakers are not likely to face huge losses the next year," said Zhu Ming.

The slow growth expected next year is sure to negatively affect domestic automakers, especially those that produce mini and micro cars, which have small profit margins. Despite this, China’s car manufacturers are expected to keep growing for the coming five years.

China’s auto market has been developing in rapid fashion since the early 1990s, surpassing the US as the largest in the world back in 2009. Also last year, China produced 13.7 million cars, of which 8 million units were passenger cars (sedans, sport utility vehicles or SUVs, multi-purpose vehicles or MPVs and crossovers), and 3.41 million units were commercial vehicles (buses, trucks, and tractors). Half the vehicles produced in the country are local brands like BYD, Lifan, Geely or Chery, while the other half are manufactured by joint ventures with foreign brands like Volkswagen, GM, Hyundai or Toyota.
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About the author: Mihnea Radu
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Mihnea's favorite cars have already been built, the so-called modern classics from the '80s and '90s. He also loves local car culture from all over the world, so don't be surprised to see him getting excited about weird Japanese imports, low-rider VWs out of Germany, replicas from Russia or LS swaps down in Florida.
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