Our man in Detroit tell us that General Motors intends to increase the number of dealerships it has across China to 4,200 from 3,800 by the end of this year. One in ten of those additional dealerships will be for Cadillac, taking the number of its dealerships to 200 from 160. Luxury marques are selling well.
Bob Socia, president of GM’s China operations, is aiming to get ahead of the growing demand for vehicles in what is now the world’s largest car market. Sales of cars and commercial vehicles are forecast to increase by 5%-8% this year, which could take the annual sales total beyond 21 million. Last year they rose 4.3% to 19.3 million vehicles even as economic growth slowed. That, though was a big improvement on 2011’s 2.5% growth in sales, hit hard by the removal of tax breaks for new-car purchases.
The biggest risk to the sales forecast for this year could be more legislation to thin traffic congestion and clean the air in big cities. Guangzhou, Beijing and Shanghai have all already done so. They may see their way to doing more on that front to, if anyone in Beijing can see anything right now. But other cities are expected to start following suit. GM’s dealership expansion could be to keep it ahead of that trend, too.
Beijing will issue only 240,000 new car registrations next year in an attempt to tackle the city’s chronic traffic congestion, such as shown by the snapshot of Google’s traffic map (right) for Tuesday evening’s rush hour; traffic jams in dark red. The new number is less than a third of the 760,000 new cars registered this year, which has taken the number of cars on the capital’s roads to more than 4.7 million — up from less than 1 million 15 years ago.
Eighty-eight per cent of new 2011 plates are being reserved for private cars. They will be allocated by lottery. Beijing residents have been rushing to buy and register new vehicles before the new regulations come into effect at the end of this week, with 50,000 cars reportedly sold so far this month, almost six times December 2009’s sales. This panic buying has led to Huang Wei, the vice-mayor in charge of transport since 2008, being transferred to a new job in Xinjiang, according to the Financial Times.
The new regulations apply to first-time car buyers. Drivers replacing a vehicle are exempt, so the measure along with higher parking charges in the city centre from April, a restriction to one car registration per person and banning cars without Beijing licences from driving within the 5th Ring Road in rush hours, will likely do no more than slow the worsening of the traffic jams. As Liu Zhi, who leads the World Bank’s infrastructure team in Beijing, argues, city authorities are going to have to take far more drastic action to cut the demand for car use, which is the prerequisite for easing the overcrowding on the roads. That means turning talk of significantly heavier investment in public transport into reality.