Auto Development Trend in 2009

The international financial crisis and some disadvantageous factors occurred in China's economy slowed down the pace of China's automotive production and sales which has kept a high-speed growth for many years.

Though China's automotive production and sales both reached near 9.40 million sets in 2008, their increase rates, namely 5.21 percent and 6.70 percent respectively, seemed to be rather low compared to the increase rates in the past decade. However, according to the China Association of Automotive Manufacturers (CAAM), China's automobile consumption will still rank the second in the world in 2008.

China's automotive industry was not decreasing all the year in 2008. The automotive production and sales experienced a course that began with increase and ended up with decrease. According to statistics of CAAM, the automotive production reached 5,199,600 sets in the first half of 2008, 16.71 percent up year on year, with a relatively quick growth, and from the third quarter, the accumulative production increase rate became increasingly low with each month. The increase rate of passenger cars slowed down obviously, and the market demand for business cars was quite influenced. So was the export of complete cars. In the first half of 2008, the export of complete cars was comparatively optimistic and exceeded 70 thousand sets in March, which was the peak in 2008. And from July, with the increasingly serious international financial meltdown, the influence on automotive export emerged obviously, and the automotive export presented a trend of gradual decrease month by month.

The whole industry met with great difficulties in the second half of 2008, but there were still some light points indicating the future development directions when we look back at the whole year.

The only raise of increase rate

According to CAAM statistics on the sales volume of specific passenger and business car types in 2008, the increase rate of almost all car types were lower than that of 2007, and the cross passenger car was the only light point. In the past 5 years, cross passenger cars increased stably by 7 percent to 10 percent, and its sales increased by 7.67 percent in 2008. Though the increase rate grew only 0.05-percentage point than 2007, it was still the only "raise" under the circumstances of overall decline. CAAM analyzed that the market of cross passenger cars were largely in rural areas. With the annually strengthened government's policy support of rural areas and the continually improved rural economy activity, cross passenger cars kept a relative stable increase trend in recent years. The quicker increase under the disadvantageous market circumstances of cross passenger cars reflects the huge potential of rural car market, the activity of which in 2009 will influence the whole car market.

Exciting number of 61.54 percent

According to CAAM statistics on 2008 basic passenger cars (sedans) data in the aspect of discharge capacity, among all sold cars, there were over 3.10 million sets with a discharge capacity no more than 1.6L, and their market share reached 61.54 percent, 3.9 percentage points up; while the market share of cars with discharge capacity from 1.6L (excluded) to 2.0L (excluded) decreased by 2.72 percentage points. The data indicated that cars with a discharge no more than 1.6L are consolidating their dominant position in sedan market, and China's car consumption structure is working toward the orientation of energy conservation and environment friendly low discharge cars. The change is closely related to the car consumption tax adjustment made in September 2008. As the car consumption tax adjustment took effect, sales of low discharge cars were promoted, which meanwhile demonstrated the enhanced conception of energy conservation and emission reduction of consumers. In recent years, the government is always encouraging the development of low discharge cars, and car makers are paying more and more attention to such cars. In 2008, furthermore, joint brands enhanced the launch of new type of cars with low discharge to get larger market share.

Rare active transaction

Similar to new car sales, the second hand car market met with the situation of slower increase in 2008, but transactions were still active. According to a statistics of CADA (China Automobile Dealers Association) on 460 second hand car transaction markets, from January to November 2008, passenger cars had become the mainstream of the second-hand car transaction, which accounted for 59 percent of the whole transaction volume, and there were 1,200,500 sets of sedans, 10.62 percent up year on year. Meanwhile, the second and third grade markets grew faster, in Sichuan, Tianjin, Liaoning, Shandong, etc, increase rates reached 130.23 percent, 71.00 percent, 65.27 percent, and 44.64 percent respectively.

Besides active transactions, what's more valuable is the increasingly growing quality of second hand cars. Statistics showed that from January to November 2008, the transaction amount of second hand cars had reached RMB 99.213 billion yuan, 10.20 percent up year on year. The national average transaction price of second hand cars was RMB42, 800 yuan, 6.73 percent up year on year. Luo Lei, the Deputy Secretary General of CADA said, presently the concept of second hand car had separated from that of "old automobile", and the consumer ideas had been gradually mature. Second hand enterprises began to pay importance to service quality, as well as honesty.

New emerging excellent independent brands in China

For China's independent brands, the year of 2008 can be called a year of adjustment. After years of fast increase, major independent brand enterprises like Chery, Geely entered a phase of corporate strategic adjustment, and made more efforts to "internal work". They launched less new car types, which led to directly the fact that the market share of China's independent brand cars decreased by 0.43-percentage point in 2008. But the up-and-coming youngster BYD had extraordinary achievement.

According to relevant statistics, few of passenger car manufacturers fulfilled their production and sales goal in 2008, and in China's independent brands, only BYD made it. In the second half of December 2008, BYD announced that it had fulfilled its production and sales goal of 200,000 sets for the whole year in advance, and its leading car type F3 sold 166,632 sets accumulatively in 2008, 66 percent up year on year, and it became one of the best-sold car types of China's independent brands.

In 2008, what's most noticeable of BYD were Buffett's share-buying of HK$1.8 billion and the dual-model electric car F3DM launched onto the market in December. The launch of the BYD dual-model electric car over years of research helped BYD "walk with two legs" in both traditional fuel car and new energy car fields. And Buffett's share-buying will accelerate the pace of BYD's expansion of North American market, especially the promotion of electric car in North America. During the North American International Auto Show 2009 held in Detroit, USA, BYD's President Wang Chuanfu had a further discussion with Buffett on the new energy cooperation plan.