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Automotive companies in China are today finding themselves confronted with a different set of challenges from what they were just a few years ago. From the demand side, Chinese consumers are becoming more selective and are making more diverse and personal choices: making their own individual choices, not just for their family. Meanwhile, demand growth is increasingly driven by lower-tier (Tier 3 and below) cities more than large and mega cities. The Chinese government has also released more restrictive regulatory requirements for safety, environmental care and foreign investment. From the supply side, almost every international player has recognized China as their largest source of future profit and has thereby committed significant investment. Additionally, Chinese local brands have never been so aggressive in fighting for market share than today. All these challenges are pushing global as well as local vehicle manufacturers to alter their thinking and adopt new strategies to play the game.

A key reason for continued growth is the rapid development of China's lower-tier cities. While China's explosive automotive growth has been most evident in the Tier 1 cities, it is important to note that the trends of urbanization and growth of per-capita GDP will continue into the foreseeable future. As these factors are directly linked to the growth in demand for automobiles, one can expect a continuation of growth next year and thereafter. Urban wealth accumulation is undoubtedly fueling the growth in automotive sales. The fact that 85% of all vehicles are sold to urban residents is a clear sign of the relationship.