China car sales surge ahead of US
Posted
Jul 09 2009, 05:51 AM
by
Douglas McIntyre
Rating:
The notion that the U.S. is the world’s largest car market is gone, perhaps forever. China’s light vehicle sales rose 48% in June to 872,900.
The world’s most populous country will produce sales of at least 10 million cars, SUVs, and pick-ups this year. The U.S. number is not likely to top 9.6 million. China’s GDP is rising at 7% or better. It is hardly in a recession. Its large middle class has access to billions of dollars in capital, partially because of the country’s new $585 billion stimulus package.
The news is an indication that the auto market share war in China will heat up as local companies fight with foreign operations such as GM and VW for sales. Chinese car companies have joint ventures with car firms based in Japan, the U.S., and Europe. The concern of the outsiders is that China’s auto manufacturers will take what they have learned about product development and manufacturing to build their businesses and take a growing percentage of overall sales.
Companies such as General Motors (GMGMQ) may face an uphill battle with the local automakers in China, but they still have to fight it. The largest U.S. car firm may never recoup the unit sales it had in America in 2004 and 2005. GM’s recovery may depend to a very large extent on how well it can do in the Chinese market.
The distance between vehicle sales in China and those in the U.S. is bound to grow next year, especially as unemployment in America passes 10%. It would not be unimaginable to think that China could produce 20% more sales than America does in 2010.
Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.
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