The following is written by Guest Contributor, Sven Serrano, our man in China. Sven lived in Japan for years and now lives in China. He visited the Shanghai International Automobile show this past weekend and writes of cars and countries. _______________________________________________________________________________________
This week in Shanghai, the shout of “Gentlemen, start your engines!” was heard twice; first at the Shanghai Grand Prix, where F-1 fans thrilled to a magnificent race won in the driving rain by Sebastian Vettel of the Red Bull team, and then at the Shanghai International Automobile Show, an event now in the world’s spotlight as economic data from the last three months confirms that China’s growing market for new cars has overtaken that of the United States.
Japanese and American auto manufacturers were out in full force at the show in hopes that Chinese sales can revive their fortunes and soon. Running the pit stop for this historic lap are the technocrats in Beijing. The Chinese government enacted a fiscal stimulus package that has, at least in this sector of the domestic market, unlocked the cash box of middle and upper class consumers eager to buy their first car. Retail taxes on small cars were halved this year and 5 billion RMB have been pledged to spur sales of cars in the hinterland.
Much is made of economic growth and consumption in China’s mega cities – Beijing, Shanghai, and Guangzhou, but the real money waiting to be made is in the medium-sized towns in the hinterland. Cautious Chinese consumers have a tendency to wait for government signals and then, like this spring, make a purchase at the optimum moment.
March 2009 sales statistics (collected by Automotive Resources Asia) showed that 1.11 million vehicles were sold, mostly compacts/sub-compacts, minivans and light trucks, 34% more than in February. If these trends continue, China’s auto sales may hit the 10 million mark for 2009 and make this country the world’s largest auto market.
As the U.S. gives up its place as the number one car market, Japan too may have to forfeit its title as the largest auto-producing nation to China.
Part 2 of Car Wars appears in tomorrow's post - Find out how these automakers are vying for control on the Chinese track.
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Sven Serrano, is a free-lance writer specializing in Green Business and Investment issues, now living in Shanghai. A former Sierra Club employee, he worked as a university lecturer in Japan for over a decade, before moving to China last year. He is currently shopping for an alternative fuel hybrid electric car.
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