China's booming car market spurs foreign investment

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.