As the U.S. struggles to recover from the global economic recession, China is showing signs it is faring the downturn much better than analysts expected.
Take auto sales, for example. While the U.S. auto industry experienced big declines, the Chinese market boomed thanks to an expanding economy and plenty of government subsidies.
U.S. automaker General Motors’ sales in China surged 67% in 2009. Sales have been so good that General Motors China's sales surpassed those in the U.S. in nine of the first 11 months of the year.
And it’s not just one of the big three U.S. automakers’ numbers that are shining. According to CNN Money, Ford Motor Company’s (F:NYSE) Chinese partner reported sales in December rose 61.4% to 27,680 units from 17,148 units a year earlier.
In an article in the Washington Post, noted professor Kelly Sims Gallagher at Tufts University and author of a book in the Chinese auto industry said, "There's no question that China will become the world's largest auto market as long as the economy keeps growing. "
In fact, earlier this week, Reuters reported that Chinese automobile franchiser Zhongsheng Group aims to raise between $800 million and $1 billion from a Hong Kong IPO in the first quarter of 2010. The company is aiming to tap robust growth in the country's auto market, now the world's largest.
However, recent rumblings from China suggest the government wants less dependency on foreign automakers. According to Edmunds Inside Line, the Ministry of Industry and Information Technology revised a blueprint for China's auto industry, targeting China's self-branded cars to take 40% of the nation's total car market.
Total sales of Chinese-brand passenger vehicles, including cars, sport-utility vehicles, minivans and multipurpose vehicles, hit 4.09 million units for the first 11 months of 2009.
Meanwhile back home in the U.S., experts predict auto sales will show a record 30-year low with about 10 million unit sold. For the first 11 months of the year, sales were off a total 23.9%. However, according to the National Auto Dealers Association (NADA), dealers are hopeful 2010 will show signs of better recovery in the auto industry.
The industry has stepped up incentive programs hoping for a boost in sales. NADA suggests earlier signs show sales have been brisk. Of course, the auto industry got a boost earlier in 2009 with the introduction of the government’s “Cash for Clunkers” program.
Most dealers report the program brought more buyers into the showroom. The incentive program offered consumers as much as $4,500 to trade in gas-guzzlers for more fuel-efficient vehicles. Trade-ins could not be older than 25 years or get more than 18 miles per gallon—in most cases.
One other rosy sign for auto dealers is that more car loans are being approved for people with average to above average credit scores.
Other Articles Related To This Topic:
