China's automakers to target third-tier cities

After auto sales tumbled in the third quarter in first- and second-tier cities, a survey by Sinotrust, a Beijing-based marketing research and consulting company, suggests that it is time for China-based auto makers to target the smaller third-tier cities.

Third-tier cities saw their auto sales rise 12 percent in the third quarter, showing a high growth potential, while the market situation "will continue to deteriorate in the first- and second-tier cities as a result of the financial crisis," Lang Xuehong, a Sinotrust executive, said to the Chinese language Economic Observer.

Growth potential is also high, Lang said, in cities in China's central and western regions – evidenced by a 24 percent increase in car sales in those regions in the first 11 months of 2008, much higher than the 7.3 percent national average, according to National Passenger Cars Association of China.

Purchasing power of smaller cities can be further strengthened as the central government's 4 trillion yuan ($586 billion) stimulus package boosts agricultural business, industry observers said.