China stimulus plan to revive auto sector

Analysts believe China's 4-trillion-yuan ($586-billion) stimulus plan will help stabilize consumer confidence, and in this way, increase the domestic demand for cars.

Analysts say that although China is not in a recession, growth in its auto market could still slow down. For that reason, they are telling domestic manufacturers to focus on new car designs or look for areas with higher growth potential. They also suggest carmakers adjust their output plans.

Others say they think China's auto sector still has room for expansion in second-tier or smaller cities, with market penetration in this sector still lagging behind developed countries.

Su Hui, General Manager of BJ Yayuncun Auto Market said "The financial turbulence has meant some changes for auto producers and car dealers' marketing strategies. For instance, manufacturers are likely to develop more fuel-efficient, economical vehicles in the future."

Auto manufacturers are already adjusting their marketing strategies in China. Many have shifted to focus on developing smaller vehicles, because they believe compact cars will be a future area of growth in the Chinese market.

The auto industry has been one of the hardest-hit victims of the global financial crisis. Still, compared to other countries, Chinese carmakers are seeing relatively good sales in China.

The industry could stretch growth in several other sectors, providing a basis for a multitude of related services and support industries. Figures show that in Germany, the auto industry and related sectors provide nearly a quarter of the country's tax income, and nearly one-seventh of the total workforce.

Therefore, experts say, the stability of the industry can directly influence the country's economy, and the sector will continue to be an importance source of employment.