In the first half of 2009, the Chinese auto market showed strong performance, with sales reaching 6.988 million units, reflecting a year-on-year increase of 17.69%. Sales have been growing month by month since January, prompting the China Association of Automobile Manufacturers (CAAM) to raise its annual sales target from 10.2 million to 11 million vehicles. This update was shared by Dong Yang, executive vice president and secretary general of CAAM, on July 9th.
Comparing global figures, the U.S. saw a 35.1% drop in new car sales, Japan experienced a 21.5% decline, and Russia faced a steep 49% fall. In contrast, China took the top spot in global auto sales for the first half of 2009. Industry observers are now asking: will this growth continue into the second half?
Experts suggest that government stimulus policies played a key role in reviving the market. Pang Qinghua, chairman of Da Dong Automobile Group, noted that the intensity of policy support in just six months was unprecedented. The reduction of purchase tax for small-displacement vehicles, along with the "Car to the Countryside" program, helped boost demand. These measures activated the market and encouraged consumers who had been waiting to make purchases.
Jia Xinguang, a senior industry expert, emphasized that the underlying demand for cars in China is still significant. With low car penetration rates and underdeveloped secondary and tertiary markets, there's a huge potential for future growth. According to data from the National Information Center, only 20.5 cars per 1,000 people in China, indicating substantial room for expansion.
Despite the positive momentum, challenges remain. Many automakers faced declining profits in the first quarter, with some reporting drops of up to 54%. However, as the year progressed, profit margins began to stabilize, partly due to lower production costs and improved efficiency.
Pang Qinghua warned that the "increasing production without increasing revenue" trend could intensify in the fourth quarter. Companies had set conservative targets at the start of the year, but with higher-than-expected demand, supply may not keep up. To clear inventory, manufacturers might need to offer more discounts, squeezing profit margins.
The commercial vehicle segment also faced difficulties, with sales down slightly despite an increase in production. However, experts believe the market will improve as infrastructure projects and rural development policies take effect.
Several automakers have raised their annual sales targets. Changan increased its goal from 500,000 to 600,000 units, while Beijing Hyundai boosted its target by 11.1%. Dongfeng Yueda Kia reported a 41% sales increase in the first half and expects to exceed 200,000 units for the year.
Looking ahead, Jia Xinguang expressed concern about the sustainability of growth beyond 2009. He highlighted the importance of consumer credit in supporting long-term demand. Currently, only 10% of car purchases in China are made through financing, far below the 70% seen in developed countries. Strengthening credit access could help convert potential buyers into actual customers.
As the industry prepares for next year, policymakers are considering new incentives to promote auto finance. Experts agree that a robust credit system will be crucial for maintaining growth in the years to come.
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