Wednesday, March 21, 2012

China is poised to be the largest new car market for years to come. Let's have trade peace and not a trade war...

China WILL be a major destination for new cars in the coming years/decades.  Smart companies (and forward thinking students) will be laying the groundwork for exploiting this huge market.

From the Financial Times:

Carmakers: it’s all about China

""Three bits of proof on Wednesday, if more were needed, that for most carmakers China is crucial to survival – let alone success.

First, Jaguar Land Rover announced a joint venture with Chinese manufacturer Chery. Then BMW and Volkswagen took hits to their share prices on negative comments about their China sales. And finally, Skoda (a VW unit) announced a boost in profits, driven by Russia and India – and China.

The JLR tie-up with Chery is good news for Indian parent Tata Motors. According to the FT’s John Reed, the UK brands sold 42,000 cars in China in 2011, a 60 per cent rise on 2010 and equivalent to 17 per cent of the group’s global sales, up from just 1 per cent in 2005.

The joint venture allows the company to make cars in China – most JLR cars are made in the UK and Land Rover 4x4s are proving very popular with Chinese customers.

Skoda’s sales in China show a similar pattern. They increased by 21.9 per cent last year from 2010. China now represents over a quarter of Skoda’s sales with 220,000 units, nearly 100,000 more than Germany, its next biggest market.

Skoda, which is the Czech unit of Volkswagen, also saw high growth in Russia and India – 62.5 and 49.9 per cent, respectively, but this from a much lower starting point than in China. Overall, the company saw a 66 per cent rise in operating profit last year.

And yet it was a bad news day for Volkswagen. The company and BMW were the biggest fallers on the FTSE Eurofirst 300 after worries that their sales in China would struggle to meet forecasts – news that knocked the entire automotive sector.
From the FT:
The German carmakers sank after an official from the China Association of Automobile Manufacturers admitted that sales growth in China might fail to reach forecasts. Volkswagen closed the session down 4.4 per cent at €133.05, while BMW shed 5 per cent to €68.22.
Carlos Gomes, auto analyst at ScotiaBank, told beyondbrics that even with a slowdown, China would remain the driver of growth in the market for the next decade. “In China, there are around 58 vehicles per 1,000 people. In the G7, the average is around 600. There is still a huge rise in incomes occuring where people can now afford their first car.”

The rise in China’s auto industry tells the story. Gomes points out that in 2000, China produced 2m cars. In 2011, that figure had risen to around 19m.

For carmakers, China simply can’t be ignored.""
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