International automakers reassess their plans for expansion in China


The sudden slowdown in China’s auto sales growth is forcing multinational producers to reassess their ambitions and product range in the Chinese market. This market in China has become the most important source of global automotive company growth. Sales of cars in the Chinese market rose rapidly from 750,000 units in 2001 to 1.2 million units in 2002, and then nearly doubled in 2003 to 2.1 million units, and at the beginning of 2004, they grew at a rate of 50% per month. However, as part of the economic slowdown measures, the Chinese government has decided to shrink credit, which makes local bank auto loans, the main driving force for growth, almost exhausted in recent months. Multinational corporations and their Chinese partners have invested more than US$10 billion in funds in the past year, aiming to increase production capacity to about 6 million vehicles by 2007, which will be three times the sales volume of Chinese cars in 2003. But senior executives said that the lukewarm market conditions are forcing companies to reassess their expansion plans.

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