Car sales to grow by 12 per cent in 2006: S&P
17 Mar 2006
"We expect an average growth in car sales in China of at least 10-15 per cent per year over the medium term," said S&P's credit analyst Maria Bissinger.
"In India, market forecasts suggest a growth rate of about 10-12 per cent in 2006, matching long-term economic growth expectations in the country," she added.
This will be supported by increasing purchasing power in these two countries, in which currently fewer than 10 in 1,000 driving-age inhabitants own a car. GDP is forecast to grow by 5.5 per cent per year in India and 5.2 per cent per year in China between 2006 and 2020.
On a lower level, the emerging Russian car market is also attractive to global automakers, after seeing growth of 7-8 per cent per year since 2000.
Every major international manufacturer is now present in the Chinese market, in which more than 100 auto manufacturers currently compete, the report says. As well as imports, international automakers are increasingly setting up local assembly and production plants, generally in conjunction with domestic joint-venture partners. Germany's Volkswagen AG, the first foreign carmaker into the Chinese market nearly 20 years ago, still narrowly retains its leading share. It is followed closely by General Motors Corp. which currently has six joint ventures, and is increasing its production capacity.
The Western automakers' move eastward is changing the landscape of global auto production, the S&P report says. Although three-quarters of vehicles are manufactured in the three key production regions of North America, Western Europe, and Japan, China has now overtaken South Korea and France to become the fourth-largest auto manufacturer in the world.
The Indian car market is still more concentrated than China's, although foreign players are taking a growing interest. "The Indian market is in some respects mirroring the development of the Chinese market with a few years' time lag, but without the explosive growth seen in China in 2002 and 2003, when private car ownership began to flourish," said Bissinger. "The steadier pace of investment in India suggests that automakers might be trying to avoid the overcapacities that have appeared in China. We expect automakers to continue to tread more carefully in the Russian market."
According to the S&P report, as the new Eastern markets eventually consolidate, the strongest domestic players will be best placed not just to anchor their home market positions but also to put pressure on Western markets through exports and the establishment of production capacities, as indicated by Chinese automakers' plans to build plants in Eastern Europe in the next five years.
.webp)
