Auto Sector Well Prepared for Int'l Financial Woes

The influence on the global economy brought by the international financial meltdown initiated from the U.S. gradually penetrated through the field of real economy from virtual economy, and the influence to China also emerged slowly. China automotive industry which is relevant to many other industries has felt the influence brought by the crisis. The automotive production and sales began to decrease after their continuous rapid growth in the first half of 2008. More and more consumers kept the attitude of holding cash in hand. What we need more is confidence, but to face the difficulties, the confidence in China's automotive industry and market. Only with firm confidence and calm response can China's automotive industry pass through the winter.

The internationally financial crisis brought disadvantageous influences on China's automotive industry, which has kept an increase rate over 20 percent for recent years. It's important for China to face the challenge; at the same time, the confidence is indispensable. After calm analysis, it can be found that the basic development tendency of China's automotive industry doesn't change, and the primary impetus of growth doesn't lose.

The backbone was unchanged

"There are some influences, but the backbone is unchanged." This was the reply of many domestic auto makers concerning the influence of the international financial meltdown. For many enterprises, the present international financial meltdown impacts China's auto market indirectly in a form of chain reaction, and may influence the export of domestic completed vehicle and parts and accessories, but won't "have a fracture" extensively.

The production and sales data of China's automotive industry testifies this view from another aspect. According to statistics of China Association of Automotive Manufacturers (CAAM), from January to October in 2008, the automotive production and sales reached 8.0181 million sets and 7.9448 million sets respectively, 11.01 percent and 11.11 percent up year on year. Among them the production and sales of passenger vehicles are 5.7079 million sets and 5.6416 million sets respectively, 11.00 percent and 11.07 percent up year on year. The production and sales of business vehicles are 2.3102 million sets and 2.3032 million sets respectively, 11.05 percent and 11.22 percent up year on year. Though the increase rate of automotive production and sales began to decrease in the second half of 2008, in a word, the automotive industry still keeps a basic tendency of increase.

Meanwhile, the internationally financial meltdown spread from virtual economy to real economy, from the American market to the globe. Such a transmission course offered a grace period for China's automotive industry, which makes the whole industry prepared both mentally and practically. The active response to the crisis of automotive circle in recent days is powerful proof.

Zhang Hailiang, Executive Manager of Sales and Marketing, Shanghai GM, stated that Shanghai GM had made preparations for "passing through the winter" by effective responsive measures as enhancing self management efficiency, saving cost, improve labor productivity, and providing auto models with higher cost performance. Guangzhou Honda also made preparations in advance. Its General Manager Ogawara said Guangzhou Honda would timely make adjustment in sectors of inventory, production, and product launch though real-time market analysis and research.

Confident in mid and long-term development

Chinese automotive market almost gathers all major auto brands in the world, and multinational auto manufacturers regard Chinese market as one of their most important market globally one after another. Recently, influenced by the international financial meltdown, some multinational car makers even increased their investment in Chinese market. The reason lies in their confidence in the future development tendency of Chinese auto market.

Confidence in auto market is firstly initiated from the confidence in Chinese economy. Impacted by various hardships, Chinese economy is still growing rapidly.

"Demands in Chinese auto market are still huge, and didn't disappear with the advent of the international financial meltdown." An Jin, General Manager of JAC Motors believed that the huge market demands determined the increase tendency of Chinese auto market in mid and long term. China is still an auto market with a relatively high increase speed in the world, and most people are in the phase of first car purchase. The "Official Report on 2007 National Economy and Social Development Statistics" indicated that by the end of 2007, China's private car population reached 15.22 million sets, 32.5 percent up year on year. Since 2000, the private car population is always increasing with a relatively high speed. On the other hand, with the economic development and increase of national income, families which can afford a car are getting more and more.

Other experts expressed that Chinese auto industry specializes in sale in domestic market yet, and the international financial meltdown would influence the export business most likely, which doesn't have large market shares in the whole production and sales of auto industry in China. Therefore, the impact on the mid and long term increase of auto industry will be limited.

Change the danger into an opportunity

The so-called "crisis" has implications on both danger and opportunity, or challenge and chance dialectically. If we can find opportunity in danger, try to convert danger into opportunity, we will hold the initiative of development. While the automotive industry undertakes the international financial meltdown, it can find new opportunity of development.

Inevitably, each industry will meet with periodical circle of fluctuation. After a long term of rapid growth, China automotive industry will meet a temporarily stagnation whether there is an international financial crisis or not. And the current international financial meltdown just triggered a new round of adjustment period. Such an adjustment period will drive the quicker integration of auto industry especially in the sector of parts and accessories. In such integration, businesses with low technological content and small scale might be discarded, and those better, more mature businesses with development potential might survive and grow stronger. The quality and cost competitiveness of the industry will be enhanced, and it is an opportunity for China's auto industry to grow from scale to strength.

The opportunity also lies in the import of technologies and talents. Some experts think China's automotive industry should make full use of this opportunity to attract more high-level international auto talents to work in China, and bring more advanced management ideas, technologies and experiences to China's automotive industry.

Recently, a large number of foreign capitals were invested into China's independent brand cars. It is undoubtedly a new development chance for China's independent brand cars.

 

 

 

Source:CE.cn