Chinese Auto Industry to Grow with International Participation, Reports Frost & Sullivan

    BEIJING--Feb. 5, 2001--China has been a closed market for years, with its domestic automotive industry well protected by government policies.
    China's addition to the World Trade Organization (WTO) will alter market dynamics tremendously. Under WTO regulations, the highly fragmented domestic market should consolidate and become more systematic. Soon, buyers will be able to choose from advanced technologies and a vast range of products. In such a market, buyers, not sellers, will call the shots.
    "Strategic Insight into the Chinese Automotive Markets," the latest study by Frost & Sullivan (www.transportation.frost.com/), offers a unique perspective into the Chinese automotive market.
    According to the study, the Chinese government has designated the automotive industry to be its barometer of economic growth. To ensure growth, the government plans to boost car sales by transferring the taxes and fees associated with car ownership into a fuel tax. Private buyers will also have multiple finance and loan options available to them. However, the major factor driving car sales is the rising incomes of the middle class.
    In 1999, this industry grew by nearly 19 percent to reach 18.3 million unit shipments. It should continue to grow strongly at 10 percent per year until 2002. The growth forecast for component sales is also steady at 12 percent and is expected to reach $11.5 billion in 2002.
    "Aftermarket demand for components will continue to grow because of the increasing number of aging vehicles on the road," says Frost & Sullivan industry expert Kavan Mukhtyar. "The cancellation of the ten-year service restriction by the government should also result in increased demand."
    The onus on Chinese companies is to get their houses in order by reducing production costs and stepping up research and development efforts. With superior technologies coming in from abroad, consumers will have better products to choose from at lower costs.
    "The key might lie in entering into alliances with foreign players; especially in the components market, where the government has allowed attractive policies to the same effect," say the experts at Frost & Sullivan. "For the global players, the study provides strategies for market entry, product sourcing from China and vital information to assist in setting up manufacturing bases in China."
    Frost & Sullivan, headquartered in San Jose, Calif., is a global leader in international strategic market consulting and training. Frost & Sullivan's industry experts monitor the automotive industry for market trends, market measurements and strategies. This ongoing research is used to complement the Automotive OEM Custom Subscription, which includes studies on the Indian Automotive Market and the European Automotive Sensors Markets. Executive summaries and interviews are available to the press.
    In addition to developing in-depth strategic market consulting research, Frost & Sullivan also provides custom consulting solutions to a number of national and international companies.

    Strategic Insight into the Chinese Automotive Markets

    Report: 7768-18 Publication Date: January 2001