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China becomes 2nd largest market for new cars(01/11/07)


   China overtook Japan to become the world's second largest market for new vehicles in 2006 next only to the United States, registering sales of 7.22 million units, up 25.13 percent year-on-year, according to the China Association of Automobile Manufacturers (CAAM) on Jan.11.

    China's automakers last year produced 7.28 million vehicles, up 27.32 percent over the previous year, making the country the third largest auto producer in the world.

    Sales of passenger vehicles reached 5.18 million, up 30.02 percent, while production reached 5.23 million, up 32.76 percent.

    Output of commercial vehicles rose 15.25 percent to 2.05 million in 2006, while sales reached 2.04 million, up 14.23 percent.

    Statistics show rising auto sales were mainly driven by sales of sedan cars - passenger cars excluding SUVs and MPVs - which grew 36.89 percent to 3.83 million units last year and contributed 71.4 percent to last year's auto sales increase of 1.4 million. The output of these cars grew 39.25 percent to 3.87 million.

    The top 10 automakers accounted for about 83.9 percent of all auto sales, including Shanghai Automotive Industry Corp. (SAIC), First Automobile Works (FAW) and Dong Feng Motor Corp. (DFMC), which respectively sold 1.22 million, 1.17 million and 932,300 vehicles as the top three sellers.

    Chery Automobile Co. Ltd. was the seventh largest automaker and the fourth largest producer of sedan cars, with sales of 302,500 vehicles, including 272,400 sedan cars.

    Geely Group, another privately-owned company that develops and produces its own models, sold 204,400 vehicles in 2006, making it the tenth largest automaker in China.

    Three Sino-foreign joint ventures - Shanghai General Motors, Shanghai Volkswagen and FAW Volkswagen - were the top three producers of sedan cars.

    Meanwhile, Chinese homegrown brands took a greater share in the domestic market for passenger cars, with a 41.47 percent market share.

    China adopted a series of energy-saving measures in 2006 to regulate the auto market, including relaxing restrictions on small engine-size cars in big cities and raising tax rates on high-grade cars.

    As production expanded, Chinese automakers lowered prices and put out new models in a mass scramble for a larger market share.

    Analysts believe these factors explain why the country's auto sales have been growing rapidly despite rising oil prices and crippling traffic congestion in major cities.

    Eighty percent of the sedan cars sold last year were purchased by individuals, meaning another three million Chinese became car owners in 2006.

    "Car sales will grow 15 percent to hit eight million units in 2007," said Jiang Lei, vice chairman of CAAM, adding that domestic automakers will try to explore the markets by giving priority to product and service quality rather than becoming embroiled in price wars.


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