Did you know that China is the world’s largest producer and consumer of motor vehicles? This may not be a surprise considering the Chinese government’s focus on developing the nation’s manufacturing industry and the fact that China is the world’s most populous country, home to 1.3 billion people, where a rapidly growing domestic economy is spurring an ever-expanding middle class in need of cars.
China took over as the world’s largest producer of automobiles in 2009 and continues to extend its lead over the rest of the world. China produced 19.2 million autos in 2011, more than twice the number produced by the next two biggest producers (United States: 8.6 mil., Japan: 8.4 mil.). Both the U.S. and Japanese auto industries have been hampered by the global economic slowdown for the past three years, with Japanese companies feeling the extra hit from the 2011 earthquake that brought vehicle production to a halt.
2012 was a good year for the global automotive industry as a whole. Production in both the U.S. and Japan is expected to come in at over 10 million units; for Japan, this will be the strongest performance since 2008, and for the U.S., 2007. Chinese auto production is expected to have reached an all-time high of more than 20 million units in 2012; however, growth has slowed considerably from the huge 44% and 35% surges experienced in 2009 and 2010, respectively.
Chinese auto consumption passed Japanese spending in 2005; it overtook U.S .consumption in 2009, as the recession took a bite out of U.S. auto sales and Chinese auto consumption surged. The rapid expansion of the Chinese auto industry has reflected the rising purchasing power of the Chinese consumer as well as the influence of government incentives to both companies and consumers. A growing Chinese middle class has made motor vehicles more affordable to a larger number of people, and as a result, passenger cars now represent more than half of all Chinese motor vehicle production, up from 30% 15 years ago.
China’s motor vehicle industry produces vehicles primarily for the domestic market, although exports to emerging countries have been expanding. Chinese automakers have yet to gain much traction in the major developed countries, but this is likely to change in the future. Auto production in China is split between local Chinese brands and joint ventures with foreign car makers. There are dozens of Chinese auto makers, but there are a few larger companies that dominate both the domestic and (limited) export markets. Today, GM remains the world’s largest automaker, but still battles with Toyota every year for that honor. Will names like Dongfeng, Geely, and Chery gain the global brand recognition to be mentioned in the same breath as GM and Toyota?