Rocky 2008 for Chinese Car Makers
[2009-01-13]
Last year was a rocky year for China's auto industry, with much to be proud of and also some disappointments.
The world's second-largest auto market could not be shielded from the global financial crisis as vehicle sales slowed and car makers' profitability suffered.
The biggest concerns of the auto manufacturers were how to rev up sales and whether the sluggish market would continue this year.
As vehicles consumed 50 percent of the nation's total fuel consumption, the government raised vehicle consumption tax on big cars and reformed the fuel pricing scheme as part of its efforts to encourage more people to buy fuel-efficient vehicles.
The year was also a proud one for China with the successful staging of the Beijing Olympics. Chinese car makers took advantage of the event to showcase their development of eco-friendly vehicles which were used to ferry athletes and overseas friends in the Olympic Village.
Some Chinese car makers unveiled their self-developed and self-designed green vehicles in the domestic market last year including BYD's F3DM, a fuel cell hybrid.
Shanghai Daily is running a special edition to review the performance of car makers and picked the top 10 news events that influenced the industry the most.
Hopefully, it will give insight into future trends of the industry.
We reviewed five today and will run the balance on January 20.
1. Market downturn
Although China may report its first single digit growth in vehicle sales last year in seven years, total sales will still fall short of an earlier estimate of 10 million units.
The end of what used to be more than 20 percent growth in sales stemmed from a series of negative factors including natural disasters such as snow storms and devastating earth quakes.
Rising fuel prices and record-high inflation also deterred people from buying big items.
In the second half of last year, demand for vehicles continued to be weak as a global financial crisis slowed the economy, undermined consumer purchasing power and hurt vehicle exports.
According to the China Association of Automobile Manufacturers, vehicle sales totaled 8.63 million units for the first 11 months of last year, an increase of 8.52 percent from a year earlier.
In August, vehicle sales posted the first year-on-year decline in three years, slowing China's fast-growing auto market.
Opinion: Analysts are split over the outlook for the vehicle market this year, with some thinking it will remain flat while others expect a rebound in the second half. Amid the slow demand, paying more attention to after-sales services will not only maintain brand loyalty but will also generate new profits.
2. Higher tax on big cars
The central government doubled the sales tax on big cars to as high as 40 percent while cutting it on small cars in September in its drive to cut energy use and emissions.
The vehicle consumption tax for passenger cars with engine capacities between 3 liters and 4 liters was raised to 25 percent from 15 percent, with the rate for cars with engines of more than 4 liters doubling to 40 percent. The rate for cars with engines that are 1 liter or less fell from 3 percent to 1 percent.
Opinion: With the new policy, the government intends to encourage people to buy more small cars to save energy and keep the environment clean. But many people question its real effect as it only targets two small market segments. Auto buyers are less attracted to the 2 percent rate cut for small cars while those who are able to afford gas-guzzling vehicles are usually less price sensitive. More measures such as cutting 10 percent in the vehicle purchase tax are expected this year.
The world's second-largest auto market could not be shielded from the global financial crisis as vehicle sales slowed and car makers' profitability suffered.
The biggest concerns of the auto manufacturers were how to rev up sales and whether the sluggish market would continue this year.
As vehicles consumed 50 percent of the nation's total fuel consumption, the government raised vehicle consumption tax on big cars and reformed the fuel pricing scheme as part of its efforts to encourage more people to buy fuel-efficient vehicles.
The year was also a proud one for China with the successful staging of the Beijing Olympics. Chinese car makers took advantage of the event to showcase their development of eco-friendly vehicles which were used to ferry athletes and overseas friends in the Olympic Village.
Some Chinese car makers unveiled their self-developed and self-designed green vehicles in the domestic market last year including BYD's F3DM, a fuel cell hybrid.
Shanghai Daily is running a special edition to review the performance of car makers and picked the top 10 news events that influenced the industry the most.
Hopefully, it will give insight into future trends of the industry.
We reviewed five today and will run the balance on January 20.
1. Market downturn
Although China may report its first single digit growth in vehicle sales last year in seven years, total sales will still fall short of an earlier estimate of 10 million units.
The end of what used to be more than 20 percent growth in sales stemmed from a series of negative factors including natural disasters such as snow storms and devastating earth quakes.
Rising fuel prices and record-high inflation also deterred people from buying big items.
In the second half of last year, demand for vehicles continued to be weak as a global financial crisis slowed the economy, undermined consumer purchasing power and hurt vehicle exports.
According to the China Association of Automobile Manufacturers, vehicle sales totaled 8.63 million units for the first 11 months of last year, an increase of 8.52 percent from a year earlier.
In August, vehicle sales posted the first year-on-year decline in three years, slowing China's fast-growing auto market.
Opinion: Analysts are split over the outlook for the vehicle market this year, with some thinking it will remain flat while others expect a rebound in the second half. Amid the slow demand, paying more attention to after-sales services will not only maintain brand loyalty but will also generate new profits.
2. Higher tax on big cars
The central government doubled the sales tax on big cars to as high as 40 percent while cutting it on small cars in September in its drive to cut energy use and emissions.
The vehicle consumption tax for passenger cars with engine capacities between 3 liters and 4 liters was raised to 25 percent from 15 percent, with the rate for cars with engines of more than 4 liters doubling to 40 percent. The rate for cars with engines that are 1 liter or less fell from 3 percent to 1 percent.
Opinion: With the new policy, the government intends to encourage people to buy more small cars to save energy and keep the environment clean. But many people question its real effect as it only targets two small market segments. Auto buyers are less attracted to the 2 percent rate cut for small cars while those who are able to afford gas-guzzling vehicles are usually less price sensitive. More measures such as cutting 10 percent in the vehicle purchase tax are expected this year.
Source: china.cn
Keywords:Car
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