News from The Freedonia Group, Inc.: Automotive Aftermarket Demand in China to Reach US$3 Billion in 2007

CLEVELAND--Dec. 1, 20030, 2003--The aftermarket for light vehicle components and parts in China is projected to increase at an annual rate of 11.6 percent, exceeding US$3 billion by 2007. China's light vehicle parts aftermarket will experience dramatic levels of growth in the coming years, driven by the extremely high rates of new light vehicle sales. This growing wave of modern design new vehicles is having an outsized effect in shaping China's small light vehicle park, and will provide additional aftermarket parts sales opportunities due to higher value vehicle content levels and the introduction of new emissions control technologies. These and other trends are presented in Automotive Aftermarket in China, a new study from The Freedonia Group, Inc., a Cleveland-based industrial market research firm.

The new light vehicle market in China has shifted towards consumer purchasers, who in the first half of 2003 bought an estimated 65 percent of all new light vehicles. Until recently, the bulk of China's new vehicle sales have gone to government, military and industrial bureaucracies and to taxi fleets. The light vehicle aftermarket is thus in an embryonic phase as it moves from institutional to consumer dominance, and the new playing field will require the development of strong retail brands, efficient distribution channels and sophisticated marketing approaches.

The largest product category in China's light vehicle aftermarket will continue to be mechanical products. Demand for electronics products, especially security systems and electronic controls and modules, will post the strongest advances. Replacement rates for electrical and exterior and structural parts will also experience robust growth going forward.

Professional service providers -- the so-called do-it-for-me (DIFM) market -- will remain dominant throughout the forecast period, with those aligned with the light vehicle manufacturers capturing much of the market share. The do-it-yourself (DIY) segment of the aftermarket is negligible, but will grow strongly as China establishes a true used vehicle market.