China to Surpass USA as Number One Auto Market?

SHANGHAI, Dec 4, 2006: Reuters reported that a Chinese academic at a government think-tank said China will surpass the United States as the world's top automotive market by 2020, with output reaching 15 million units.

China's motor vehicle output will likely grow 10 percent annually in coming years, said Zheng Xinli, vice director of the Chinese Communist Party's Policy Research Office, in a report published in the Economic Daily. Passenger cars may account for some 60 percent of the total production, he said.

Last year, China's vehicle output grew 12.56 percent versus 2004 to 5.71 million units, according to statistics from the China Association of Automobile Manufacturers.

heng mentioned home-grown Geely Automobile Holdings Ltd. and Chery Automobile Co. as two of the firms poised for the market expansion.

"Their success is evidence that the Chinese industry can wholly depend on our own efforts, to make automotive products based on our own intellectual property," said Zheng.

Chery exports its low-priced cars to roughly 30 countries, most of them developing nations, and Geely founder and chairman Li Shufu told Reuters in September he hoped to sell cars in the United States by 2008.

Shares in Geely have surged 165 percent so far this year, outpacing a 61 percent gain in the H-share index of Chinese companies listed in Hong Kong.

China became a net exporter of cars and trucks only last year, when its vehicle exports grew 120 percent to 172,800 units.

Industry executives and analysts, however, remain sceptical of Chinese automakers' capability, but the prospect still worries the likes of General Motors and Volkswagen .

A Ministry of Commerce official said last month China aims to lift vehicle and auto parts exports to $120 billion, or 10 percent of the world's total vehicle trading volume, in the next 10 years.

Last year, exports reached $10.9 billion, an increase of 34 percent over the previous year, but only accounting for 0.7 percent of the world's total vehicle trading volume, Vice Minister of Commerce Wei Jianguo was quoted by official news agency Xinhua as saying.