Frbiz Reports on Two Factors Contributing to Growth of Chinese Auto Market

Jan 13, 2010, 10:00 ET from

BEIJING, Jan. 13 /PRNewswire-Asia/ --, one of China's leading B2B search platforms with more than 30 B2B industry websites to its name, reports on two factors contributing to the high growth of the Chinese Auto vehicle high-growth two factors.

The global economy is facing a huge financial crisis, but its impact on the Chinese automotive industry in 2009 has been negligible. In fact, last year it experienced explosive growth. According to Frbiz statistics, from January to November, car sales totaled more than 12 million. From March to November, car sales for those nine months were more than one million per month. This rapid growth can continue in 2010, Frbiz finds.

Frbiz pointed out that post-financial crisis, the global economic pattern has changed and given the context of global climate change, two factors will determine whether the auto industry in 2010 can maintain rapid growth.

On the one hand are consumer upgrades and product innovation.

Data shows that in 2009, from January to August, private car ownership was 23.77 million units, an increase of 31.46% over the same period of last, with private cars accounting for 81.89% of the total. Among them, sales in second-, third- and fourth-tier cities increased by 32.5%, 47.2% and 48% respectively, while totaled sales were 18.9% higher than first-tier cities. From a market share point of view, current new cars ( ) have just a 12.3% market share in first-tier cities, while non first-tier cities market share reached 87.7%. First-tier urban markets are relatively saturated, and traffic capacity is rapidly declining, but non first-tier cities still have very broad market prospects.

A key driver of innovation will be new consumption patterns, resulting in new energy-efficient vehicles. As China's economy grows, there is an ever- increasing consumption of fuel, with motor vehicles becoming the most important areas of oil consumption, and the most important growth factors. At present, China National Petroleum motor fuel accounts for 60 percent of fuel consumption, and fears of price increases or fuel shortages are driving vehicles development.

On the other hand is an intensification of government stimulus policy.

If income increases and vehicle developments are both sufficient, then a consumption environment is necessary to foster further improvement. Automobile industry stimulus was an important factor driving consumption of the hot automobile market in 2009 and will affect the auto market in 2010.

Government stimulus aimed at the automobile sector still continues. First, the reduction of the purchase tax on small-displacement 1.6-liter cars, to 7.5%, will be extended until the end of 2010. Secondly, the "old for new" car subsidy will be increased.

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