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China Association of Automobile Manufacturers & Foreign investors.

May 29, 2014

 

The domestic Chinese auto market has seen an increase in foreign investors to the extent that they now make up the majority of the Chinese auto market for the first time in a long while. While China is dominating the markets in technology and other industries their domestic auto market has not seen as big of advances as they would have hoped going up against bigger and more prepared foreign automobile manufacturers.

 

                The China Association of Automobile Manufacturers (CAAM) does mention in their annual report of the state of the Chinese automobile market that domestic Chinese car manufacturers did see an increase in domestic car sales up 7.5% from November of 2012 and up 5.5% from October of 2013. While the domestic auto manufacturers market is not growing as quickly as the foreign car market is there is still growth being seen in the domestic sector, bringing continued hope to domestic car manufacturers.

 

                In 2013 domestic Chinese automobile sales increased 11.5% while maintaining a 40% market share in the domestic Chinese automobile market. The Chinese government is attempting to create a series of incentives and subsidies to encourage the sale of domestic Chinese cars to the population while also instituting technology transfers between domestic car companies to level the playing field and create a stronger domestic manufacturing environment to better forge ahead in the years to come.

 

                Although these measures are being taken to increase the domestic market share of local Chinese car companies China is also searching for ways to profit off of the ever-booming foreign car market. The state may decrease its high tariffs on foreign cars and ease some of the restrictions on foreign automobile companies that do business in China, making it easier and more profitable for foreign car companies to do business in China.

 

Despite the pressure on the domestic Chinese car market to keep up with production and sales foreign car manufacturing companies are still investing more into the Chinese market than the domestic companies themselves are willing or able to. In addition to investing foreign car manufacturing companies have the advantage of putting out new models of cars at a quicker rate than the domestic Chinese car companies are able to. Consumers who like variety, therefore, are more drawn to purchase a different kind of car than the average Chines domestic model that is available.

Exports of Chinese cars to foreign markets are down this year although car manufacturers hope they will increase as the year continues. As the domestic market is hit by more Chinese car regulations the export market is essential to the Chinese automobile manufacturing industry. Some cities in China have continued to regulate the sales of cars, when they can be driven, and what kind of cars can be bought due to the increasing amount of pollution affecting major cities in China. This puts a damper on the exuberant nature of the Chinese automobile consumer.
The 2014 automobile year looks as though it will bring some beneficial changes to the domestic Chinese automobile market.

 

 

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