Strong car sales in China last year pushed the auto market to number one spot in the world. And 2010 looks set to continue that rosy trend, with car-makers confirming that they're upping production by as much as 13 percent to cope with intense demand.
Beijing Yayuncun Auto Market, the largest auto market in northern China, is still seeing as many customers as it did last year. Despite a hike in purchase tax for smaller cars, many buyers are still keen to drive home a new car before the spring festival.
A car buyer said, "I want to buy a car for family use. The hike in purchase tax means paying about a thousand yuan more, which is not much."
Since the beginning of the year, many auto dealers have adjusted their prices, and the market is seeing a decline in overall prices. That has countered a hike in taxes.
A dealer said, "Car prices have gone up 2,000 yuan since last year. But the average price is still down one to two thousand yuan."
Last year China adopted various measures to stimulate auto consumption. 7 million cars with engine sizes below 1.6 liters were sold, up 71 percent compared to the previous year. At the same time, measures to encourage auto sales in rural areas by providing subsidies for replacing old cars with new ones will further boost demand.
Guo Yong, manager of Beijing Yayuncun Auto Market, said, "Demand will keep growing this year. So supply will still fall short of demand in the short term."
Meanwhile, many automobile manufacturers plan to raise production by more than 10 percent, as they look forward to strong sales for the year. The Shanghai Automotive Industry Corporation plans to produce and sell 3 million vehicles this year, up 13 percent. While FAW group is also upping production by 13 percent.
Zhou Wenjie, Vice General Manager of Dongfang Auto, said, "Auto makers are optimistic about this year's auto market. We hope to maintain 10 to 15 percent growth."
According to the China Automobile Industry Association, growth in the auto industry will stay high until 2020. The total number of vehicles will go up from 67 to 150 million. High growth areas will move from eastern China to central and western regions.
