China’s New Auto Market Gains Momentum

Statistics reveal that the new auto market in China is by far the biggest in the world, with luxury vehicle sales climbing daily. Analysts predict that within seven years, China’s demand for so-called “premium” cars will outstrip the demand in the United States. Currently premium cars make up 14 percent of new car sales in the United States, with up to 9 percent of China’s sales being premium cars. It has also been noted that luxury car owners favor German models BMW, Mercedes and Audi. Now General Motors is planning to tap into the premium car market in China by building a new Cadillac factory in the country.

With a production capacity of 150,000 per year, the new $1.3 billion plant will be located in the Jinqiao zone of Shanghai, with construction starting in June 2013. While not revealing which models will be produced at the new plant, GM stated that it has plans to introduce at least one new model each year until 2016. GM does already have a presence in China, with production of the Cadillac XTS sedan at a plant in Shanghai.

Continuing with the comparison between China and the United States, in the US there are reportedly 787 vehicles per 1,000 inhabitants, while in China the figure is 85 vehicles per 1,000 inhabitants, showing that there is tremendous scope for growth in car sales. The fact that economic development in China is raising the standard of living for the average Chinese citizen is likely to add impetus to new car sales. The number of registered vehicles – including cars, vans, buses and trucks – in China was 62 million in 2009, with expectations that this number will exceed 200 million by 2020.

Currently of the automobiles produced in China, up to 44.3 percent are purely local brands, with the remainder being produced by joint ventures between Chinese companies and foreign car manufacturers, including Hyundai, Nissan, Honda, Mitsubishi, Toyota, Volkswagen and General Motors, the latter being determined to increase Cadillac’s share of China’s luxury car market to 10 percent by the year 2020.