Output up as manufacturers anticipate surging demand

PUBLISHED : Wednesday, 14 August, 2002, 12:00am
UPDATED : Friday, 08 May, 2015, 4:38pm


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China's sedan car output surged 73.8 per cent to a record 94,900 last month as manufacturers increased production in anticipation of continuing robust demand.

The output and year-on-year growth figures were the highest yet reported, with the stronger yen making domestic models more affordable in comparison to Japanese imports, the State Statistical Bureau said yesterday.

Almost all 17 car-makers in the mainland, including foreign-funded joint ventures, reported strong production growth, it said.

First Automotive Works Volkswagen Automobile reported output growth of 80 per cent for sedan cars last month over a year earlier. The joint venture between China's biggest car company and the world's fourth-largest car-maker, is now China's most successful car venture. It produces Jetta cars.

In the first seven months of this year, mainland manufacturers produced about 523,500 sedan cars, up 39.04 per cent over the same period last year.

Passenger cars now account for 25 per cent of vehicle sales in China - compared with about 70 per cent in developed economies.

In the first half of this year, 470,200 passenger cars were sold, up 36.21 per cent over the same period last year, helped by price-cutting, the introduction of new models and the entrance of first-time buyers. Last year 721,500 passenger cars were sold.

Analysts and industry officials expect China's passenger car market to grow to about one million units in the next two years, 2.1 million by 2005, 3.1 million by 2010 and 11 million by 2020.

About half of all car purchases in 2006 are expected to come from private customers, up from about 30 per cent now. Public and state-owned users are the main market for cars.

Beijing has nurtured the car market in the hope of stimulating investment and consumption.

Analysts say car demand was one of the key drivers of China's economic growth in the first half, which at 7.8 per cent was the highest in Asia.

To facilitate private ownership, Beijing is finalising a stimulus package for car buyers, including the waiving or reduction of car purchase tax and other fee cuts.

The strong passenger car growth has prompted foreign car-makers to scramble for partnerships and investments in mainland car firms.

However, the industry faces intense competition from cheaper imports after China's accession to the World Trade Organisation last December.

The government lowered car import tariffs to 40 per cent to 50 per cent this year, and they will slide to 25 per cent in 2006.