China's booming car market spurs foreign investment

PUBLISHED : Saturday, 26 April, 2014, 1:21am
UPDATED : Saturday, 26 April, 2014, 1:52am

As car sales spread from China's crowded east coast cities to the more-rural west, firms that move cars and spare parts by truck from factories to showrooms are expanding to meet the demand.

Nippon Yusen K.K., the world's largest carrier of vehicles by sea, is planning to add more logistics centres for trucks in China as part of a multibillion-yen world-wide expansion. Anji Automotive Logistics, a unit of China's biggest carmaker will "expand the construction for collecting and distributing" cars, according to its website.

China, which in 2013 became the first country where domestic car sales surpassed 20 million units a year, is forecasting higher sales this year as ownership gains spread to inland areas from coastal cities. Ford Motor, based in Michigan, is building its largest production complex in Chongqing, while Chrysler, of Michigan, is expanding a factory in Changsha, a city in the south-central province of Hunan.

"Many big cities along coasts are not seeing a big increase in cars as many people already have cars," Koji Endo, a car analyst at Advanced Research Japan, said in Tokyo this week. "For the next few years, growth should come from small coastal areas and rural areas in the west where car ownership is still very low and income is relatively low. Transportation is needed not just for cars but also auto parts."

China's car market will probably grow to 24 million cars this year and exceed 30 million by 2020, compared with 22 million last year, Endo said. In comparison the US, the second-largest car market, sold 15.6 million cars last year.

Volkswagen, based in Germany, is also building a new plant, in the far western Xinjiang region and Yokohama, Japan-based Nissan Motor this year will produce Infiniti luxury cars in the central city of Xiangyang.

"We're expanding our network in China," said Takaya Soga, a general manager of Nippon Yusen's car logistics group. "Car sales are rapidly increasing in inland China."

Anji Automotive, based in Shanghai, is a subsidiary of SAIC Motor Corp, China's largest domestic carmaker, and is the country's largest car logistics company, transporting more than 2 million vehicles annually, according to its website.

Anji transports cars for SAIC's ventures with General Motors and Volkswagen, the country's two largest non-Chinese carmakers last year.

Nippon Yusen transported 1.36 million cars in China in 2013, including some in a venture with Anji, according to figures from the company. The Tokyo-based company will probably boost trucking of vehicles to 5.7 million worldwide in 2016, from 3.7 million last year, and China's share is around 40 per cent, Soga said.

"More and more distribution centres are needed," Soga said. "Domestic production is shooting up."