This month BMW recorded its sales in China have grown by 70% from the same period last year (12). VW, the largest European car maker, announced Friday that their profit has more than tripled from the previous year, and being as China is now their leading market its safe to bet they had a lot to do with it. Marius Baader, head of forecasting at the German Automotive Industry Association researched that his organization expects total new car sales in China to grow 11 percent this year to 12.5 million vehicles, even after a growth of 34 percent in 2010.
But Mr. Baader also states “it is very difficult to continually top these very high growth rates.” Mr. Baader along with many others in his field are noticing many factors that could lead to an automotive bubble comparative to what is noticeable in the United States. With almost any auto company you can possibly think of converging on the Chinese auto market a KPGM analyst wrote “The industry may have to brace itself for some casualties.” This is idea is based on a variety of reasons: one in particular is Chinese officials discouraging car ownership by removing buyer incentives and limiting new registrations because of high traffic and pollution issues.
As more and more auto companies invest in the Chinese market to avoid the risk of being left behind in the emerging market the warning signs become more apparent. As environmental standards become stronger though Chinese companies will have the upper hand in the race for electric cars which are already in production there, greatly limiting the effect of foreign car makers.
http://www.nytimes.com/2011/02/28/business/global/28iht-cars28.html?pagewanted=2&bl
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