Global carmakers to wage fierce battle in Chinese market in `13

Global carmakers will likely stage a do-or-die battle next year in the Chinese auto market amid prospects of huge growth there.

China’s leadership, which recently ushered in the Xi Jinping era, said it will shift the country`s economic structure, which is dependent on investment and exports for growth, toward one based on a growth model of sustainability.

Beijing is set to use proactive measures to stimulate domestic consumption and demand to replace older cars will likely rise next year, so automakers worldwide, which are struggling due to falling demand due to the global economic slowdown, will likely wage a fierce battle to gain the upper hand in the Chinese market.

According to KB Investment Securities Friday, auto sales in China saw high growth of about 20 percent yearly for three years from 2005, but expanded just 6.7 percent in 2008. China overcame the slump a year later, however, easing market uncertainty.

A combined 13.65 million cars were sold in China in 2009, rising a record 45.5 percent from the year before and outpacing the U.S. Thus China emerged as the world’s largest auto market.

In an emerging market such as China, where motorization is underway, the average cycle of new vehicle purchases to replace older models is four years, so next year will see replacement of vehicles that were sold en masse in 2009.

The global auto industry thus predicts that the Chinese market will show huge growth again next year.

Shin Jeong-gwan, a researcher at KB Investment Securities, said, “The Chinese market has strong growth potential because the vehicle ownership ratio relative to the population is only 10 percent,” adding, “The Chinese auto market will see high growth of about 10 percent next year, and will eventually grow to the scale of 16.5 million vehicles sold yearly."

wiseweb@donga.com