China takes the global sales crown for 2009.
Decades before most observers imagined it possible, China closed 2009 as the world’s largest national car market, government officials reporting sales topped 13.5 million, compared with just 10.9 million for the recession-wracked United States.
While U.S. sales plunged more than 20%, last year, demand for automobiles surged 40% in China, the state-run Xinhua news agency reported. That reflects not just a strong economy but a policy of direct intervention by the Beijing government, which rolled out a series of incentive programs designed to keep the industry’s momentum going.
Among other things, normally-hefty taxes were slashed on vehicles with engines smaller than 1.6 liters. The government also encouraged the sale of alternatively-powered vehicles, such as the new plug-in hybrids sold by Chinese maker BYD. And subsidies were offered to assist the country’s farmer purchase vehicles.
Could the Chinese market hit 40 million? Click Here.
Where makers in much of the developed world, notably including the U.S., have been struggling to deal with over-capacity, manufacturers operating in China can’t add factory space fast enough.
How long the Chinese market can continue growing at the current pace is unclear, however. In 2008, the country’s appetite for motor vehicles seemed to be settling back, and sales grew “only” 8.4%, but in earlier parts of the decade, demand had more than doubled during some years.
There have been some questions raised about the 2009 boom, however, in a December article, the New York Times noted that while Chinese car sales were rising fast, demand for gasoline held steady, suggesting to some that the government might actually be stockpiling vehicles to keep factories running. Manufacturers, however, insisted the discrepancy only showed how much more fuel-efficient new Chinese products are compared to those sold in the past.
With an estimate 1.5 billion citizens, and a car ownership rate that was, not many years back, equal to barely 1 per thousand, most observers have anticipated a steady boom in China. But until recently, the market was expected to remain number two to the U.S. until at least sometime after 2020. But the sharp slump in the States has seen car sales plunge from more than 17 million a year, during the early part of the last decade, to barely 10 million in 2009.
While there’s likely to be a recovery in the next few years, few expect to see the U.S. return to the 17 million level until mid-decade, if ever. And barring a sudden shock to the Asian market, that means China will likely retain its sales crown going forward.