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Prospects good for car sales in China despite short slump

Growth in China's auto market has slowed sharply in the past year but the passenger car sector is expected to continue expan-ding, market research firm ACNielsen said in a statement yesterday.

"Prospects for the auto market [overall] are not expected to improve in 2005 but we see potential for growth in the passenger car sector," ACNielsen director of automotive research Philippe Coquelle said.

Its survey of 2,500 consumers in Beijing, Shanghai and Guangzhou found that the percentage of households owning a car and those with plans of purchasing one in the near future had increased.

The percentage of those intending to buy a car rose to 9 percent from 6 percent last year, ACNielsen said.

Beijing currently ranks highest in private car ownership, with 22 percent of respondents claiming to own a car after a gain of 11 percentage points from last year.

The level of ownership rose to 14 percent in Guangzhou, up 9 points over last year, while in Shanghai it totalled 8 percent, up 4 points, the report said.

In China overall, supply exceeds demand and as a result potential buyers have cut their budget by 18 percent to 135,000 yuan (US$16,300) from 165,000 yuan last year, ACNielsen said in the statement.

In terms of financing, only 12 percent of those surveyed said they would use bank loans to buy a car, down 8 points from the previous report in 2003.

Some 70 percent of potential buyers in China will pay cash, it said.

Value for money remains a key consideration for potential buyers, but they are becoming more selective in terms of car performance as the number of brands and models increases.

Increased competition has seen the market share of leading brands such as Shanghai Volkswagen and First Automotive Works drop, while the likes of Guangzhou Honda and Dongfeng Citroen have increased their presence.
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