China Not Really No 1 Car Market — Yet

Chinese car sales surpassing America’s for the first time makes for a good press headline but to this Bystander the substance and the symbolism don’t hold up for long once you start to pick them apart.

The comparison is based on annualizing December’s monthly sales, giving 10.3 million vehicles in the U.S. and an estimated 10.7 million in China. Detroit’s carmakers saw year on year falls between 40% (Ford) and 55% (Chrysler) in December as recession bit. In China, growth is slowing, but the economy is still growing. November’s car sales were down year on year by barely 10%. December looks to have been a strong month.

The U.S. is a mature car buying market. Pretty much everyone who wants a car already has one, and this is no time to be upgrading existing vehicles unless you absolutely need to. Similarly corporate buyers, such as car rental companies, have little call to expand or improve their fleets. In China the car buying classes are still expanding (and creating a new market for used cars as the FT notes); fleet buyers such as local governments are being encouraged to switch to green vehicles.

In the end the raw size of China’s population will make it the world’s largest car market. How far it has to grow can be gauged from the fact that China has 40-50 cars per 1,000 residents compared with 470 per 1,000 residents in the U.S.  Assuming a return to the sales rates of Detroit’s good years and comparable car ownership levels, the arithmetic puts China’s future car market at 150 million vehicles a year.

1 Comment

Filed under China-U.S., Economy

One response to “China Not Really No 1 Car Market — Yet

  1. Pingback: Chinese Cut Their Car Buying By Less Than Americans In January « China Bystander

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