Mixed Signals Mark Chinese Automotive Outlook

Major Chinese auto makers expect growth of 5% to 19% in 2012, up from just 3% this year, but there are reports near-term prospects are not promising.

The government-owned Xinhua news agency cites senior executives attending the recent Guangzhou auto show as saying they are confident about the long-term outlook for the Chinese market.

Passat helps drive robust VW China sales.

Volkswagen Group China President and CEO Karl-Thomas Neumann says VW sales in China are expected to rise 15% year-on-year by the end of 2011.

He says in the first 10 months, VW Group China and its two joint ventures – Shanghai Volkswagen and FAW-Volkswagen – saw sales increase 14.8% to almost 1.9 million units on the Chinese mainland and in Hong Kong.

“We're clearly on track to make 2011 the most successful year in company history,” Neumann tells Xinhua.

Neumann believes potentially great demand for cars in second- and third-tier cities will bolster the growth of the Chinese auto market. There now are only about seven cars per 100 persons in the country.

Yao Yiming, executive vice president-Guangqi Honda Automobile, says China's auto industry needed a cooling-down period after developing too fast over the past two years, as both production and sales doubled.

He tells Xinhua 2011 is a year for adjustment and the auto market will see growth of 5% to 10% next year.

In 2009, sales rocketed 46% to 13 million units and climbed another 32% in 2010 to 18 million.

Growth slowed sharply this year as government stimulus programs expired, with the China Association of Automobile Manufacturers saying sales totaled 15 million units in the first 10 months.

Xinhua says the association’s statistics show the 2011 market has been slowed by a 5% decline in commercial-vehicle sales, offset by a 6% improvement in passenger-vehicle deliveries.

“While auto makers remain confident about the long-term outlook for China, as evidenced by a slew of expansion projects announced in recent years, near-term prospects are not promising amid global economic uncertainties,” the news agency says.