Foreign car-makers may have made a fundamental miscalculation about China's car industry, an Economist Intelligence Unit (EIU) report suggests.
The report on multinational investment experience in China said there was increasing evidence that foreign car-makers 'have invested far too much, far too soon'.
'While experience in other developing countries suggests GDP [gross domestic product] per capita must reach US$4,000 to $6,000 before large-scale family car buying can take place, car-makers appear to believe . . . this threshold will not apply in China, or that the corporate and public sector markets are so strong that it does not matter,' it said.
The report, Multinational Companies in China - Winners and Losers, spanning nine sectors and embracing 50 companies, estimated China's per capita GDP for last year was $660.
The EIU said the exit of a much-publicised family car project in 1995 might be symptomatic of a greater and more serious problem for foreign car-makers - a fundamental shift in government policy away from the sector.
Beijing's plan in 1994 to design and build a family car was shelved as the gap between demand and capacity began to become apparent in 1995.
