With the new year less than a week away, it has now become evident that, as far as the Chinese automotive industry is concerned, 2012 was a continuation of trends from the previous year. Final automobile sales growth rates look to finish around five percent. Although 2012 marks the second consecutive year of low sales growth rates, many in the industry still hold high prospects for the country, believing that there is still a great deal of potential for future development.
In order to better understand what people expect from 2013's Chinese automotive industry, Gasgoo.com (Chinese) conducted a survey on the issue. The four question, week-long survey collected opinions from 2,108 participants.
In the first question of the survey, participants were asked what sales growth rates they predict the Chinese automobile market to achieve next year. The vast majority of participants, 83 percent, forecast fairly conservative rates of zero to ten percent. Half of those participants predicted growth rates to be five percent or less. By comparison, only ten percent of participants anticipate very optimistic rates of over ten percent. Meanwhile, seven percent responded that 2013 growth rates would be negative.
Increasingly favorable macroeconomic conditions, coupled with growing consumer demand and an expanding number of car models available, are signs that 2013's automobile market will grow even more than this year's. However, at the same time, rising oil prices, increasing traffic congestion rates and decreasing number of parking spaces are among the factors that may limit sales growth next year. Furthermore, there are concerns that government policies restricting automobile sales in cities such as Beijing, Shanghai and Guangzhou may be implemented in other locations. The existence of the above factors explains why most survey participants hold relatively conservative predictions for sales growth rates next year.
How Chinese own brand manufacturers are expected to perform next year is another matter of contentious debate. Survey participants were asked what sort of market performance they expect from domestic own brand manufacturers. Responses were mixed, with 37 percent of participants predicting their combined market share to continue to fall next year, while 29 percent believe that it will increase. 34 percent remained undecided.
After nearly two years of seeing their sales slip month to month, Chinese own brands finally started recovering some market share over the third quarter of this year. By the end of October, own brands' combined share in the Chinese sedan market rose to 31.29 percent. However, many in the industry attribute this rise in sales to the difficulties Japanese automobile brands encountered following rising tensions between Japan and China over the disputed Diaoyu Islands.
Despite the advances own brand manufacturers have made in automobile quality and technology, there is still a large gap between their products and those from rival foreign brands. Increasingly strict emission and safety standards may make it even more challenging for own brand products to compete next year, whose production costs look to further increase. Chinese manufacturers will need to continue developing their R&D, production and sales capabilities, as well as improving their brand image, in order to have a shot at further expanding their market share in 2013.
Equally worth investigating are what Japanese automobile manufacturers' prospects in China for next year look like. In the third question of the survey, participants were asked whether or not they believed Japanese automobile sales in China will recover to mid-2012 levels next year. A majority of respondents, 60 percent, answered that they will not be able to reach those levels, while only 25 percent of participants said they will. The remaining 15 percent of respondents were undecided.
The Diaoyu Island dispute instigated a wave of anti-Japanese sentiment across China this autumn, with demonstrations advocating boycotts of Japanese goods, including automobiles, flaring up through various cities. Reports of Japanese brand vehicles being vandalized during these protests became commonplace. As a result, sales of Japanese vehicles plummeted over the following months. According to statistics from the China Association of Automobile Manufacturers, just 98,900 Japanese brand automobiles were sold in the country in October, representing negative year-on-year growth of 59.41 percent. At the same time, Japanese brands combined share in the Chinese passenger car market fell to 7.61 percent.
In response to the above events, Japanese manufacturers took several measures to prevent losing more sales, including Nissan's announcement that it will compensate owners who had their vehicles damaged during the protest and Toyota's decision to rebrand itself as 'China Toyota'. These measures seemed to have made some effect, with sales of several Japanese automobile brands rising in November.
However, without being able to forecast what path constantly tense Sino-Japanese political relations will take over the next year, how Japanese automobile manufacturers will fare in China remains hard to predict.
In the final question of the survey, participants were asked how they felt the market for new energy vehicles would develop next year. 61 percent of respondents were pessimistic, saying that there will be no significant increase in new energy vehicle sales next year. Just 22 percent answered that 2013 will see new energy vehicle sales rapidly grow, while the remaining 17 percent of participants were undecided.
On December 3, four Chinese government departments established testing centers for new energy vehicles in 25 different cities across the country. In six of these cities, the government began testing subsidies directed towards household purchases of new energy vehicles. At the same time, the Ministry of Industry and Information Technology released a new list of 25 new energy vehicles, which included both pure electrics and hybrids mainly from own brand manufacturers, eligible for government subsidies.
However, the market for new energy vehicles in China is still very small. New energy vehicle sales over the first nine months of the year totaled just 6,982 units, with only 3,009 pure electrics vehicles sold. It looks unlikely that the new energy vehicle market will dramatically change in 2013.
