AFP (Beijing) - China's auto market, which witnessed a marked slowdown at the beginning of the year, is expected to maintain annual growth of up to 15 percent until 2016, a leading consultancy said Wednesday.
Rising household income should usher in growth in China's auto market of between 12 and 15 percent over the next five years, according to a new study published by the American consultants AlixPartners.
"Currently, 72 percent of urban households in China with annual income of more than 60,000 yuan ($9,250) own a car, but that represents only 20 percent of all urban households and 10 percent of all households in the country," the study said.
Auto sales in China grew by more than 32 percent year-on-year in 2010 after the nation overtook the United States as the world's biggest auto market a year earlier.
But sales dipped 0.25 percent in April in their first year-on-year fall in more than two years.
"This is now a short term slowdown" tied to the end of numerous government incentives aimed at stimulating sales, Christian Paul, a Shanghai-based director of Alix told reporters.
According to the report, rising fuel prices over the coming five years were unlikely to deter Chinese car buyers because "the car in China is more a social status symbol and the sign of a lifestyle", said Wu Jinghui, Alix's China director.
Strong growth was also predicted for auto part suppliers where robust growth in demand was likely to come as China's fleet of cars aged, the report said, while numerous Chinese auto suppliers were also well placed in export markets.
"The rapidly increasing and ageing car (fleet) in China will drive annual growth rates for parts and services in the aftermarket to above 30 percent," the study said.
In 2010, auto supply exports to the United States, Japan, South Korea and Germany saw growth rise from 36 percent to 54 percent, making Chinese auto suppliers the most profitable in the world, it said.
The main challenges for the market remain the rising cost of production as salaries rise and difficulties in finding trained personnel.
"Lack of qualified people will remain a problem for the next five to 10 years," Paul said.
Meanwhile, Chinese domestic branded car makers, which currently only hold 29 percent of the nation's market share, should see their share grow by up to five percent by 2016, the study said.
