China's car market continues to grow
Updated
China's longest-running international auto show is happening in Shanghai this week with renewed optimism about the local car industry.
The most recent automotive data in China shows record high vehicle sales. And analysts are predicting the market will continue to improve throughout the year.
Presenter: Ian Burrows
Speakers: Klaus Paur, director of the automotive research division at TNS China
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IAN BURROWS: While most countries around the world deal with struggling auto markets, China is starting to make gains again. Monthly auto sales hit a record-high 1.1 million units in March, up 5 per cent on the previous monthly record set a year earlier. And research form TNS China says despite the global economic woes strong growth is likely to continue.
KLAUS PAUR: We are actually quite confident that this year in 2009 we may come to the 10 million mark and this would be the highest sales volume that we have ever seen in China.
IAN BURROWS: Klaus Paur is the director of the automotive research division at TNS China and says the Chinese government stimulus measures are helping reignite the car industry. Among the government incentives is a tax rebate on smaller engine cars.
KLAUS PAUR: This made the vehicles cheaper and this, as our surveys also show, has motivated people go back to the dealerships and buy cars now.
IAN BURROWS: First quarter vehicle sales in China also rose 16 per cent on a year earlier but some car makers remain wary about whether the growth will continue once government incentives wear off. Mr Paur, though, remains optimistic.
KLAUS PAUR: We have now a situation where the confidence is coming back to the consumers and the prices are going down through these stimulus package and this is something where we think that over the long term there will be a positive trend and that also in the future, in the next months, certainly for 2009, that car sales will rise.
IAN BURROWS: He says growth in the short term may be slower than the industry would like but he says it's the long term that counts.
KLAUS PAUR: We do not have to be much worried because China is a certain growth market - you have 60 per cent to 70 per cent of first-time buyers who buy for the first time in their life a car and this is why, over the long term, this will be continued, a lot of potential to bring new cars into the market.
IAN BURROWS: American and European car makers have traditionally dominated Asian markets but as the local market develops, Chinese manufacturers are slowly increasing their presence both in China and on the international scene. Mr Paur says the time is right for local companies to expand.
KLAUS PAUR: They are catching step by step up in terms of design, in terms of quality and have from their price positioning obviously advantage that they're cheaper than the international brands and this can be a competitive advantage for them.
IAN BURROW: Mr Paur says on many fronts Chinese car makers like Chery, Geely and BYD have the edge over their American and European rivals. BYD boldly states it wants to be the number-one car maker in the world by 2025.
KLAUS PAUR: It is an opportunity for Chinese manufacturers simply because they can come with a unique selling proposition and the unique selling proposition is certainly a lower price and a high value for money.
IAN BURROWS: But Mr Paur say there's a way to go before they are true global competitors.
KLAUS PAUR: What they are lacking is the brand power, the brand image, what they are lacking still is a level of quality which is sufficiently good for these mature markets. If they are able to improve this then they can propose something unique which gives the competitive advantage to the American car manufacturer, also the European car manufacturer.
