Car market yet to peak, insiders say

Association expects automobile industry to progress over next five years

More than 24 million vehicles were sold in China last year, but the auto market still has much room to grow, according to an industry expert.

"I estimate it will not reach the peak until 40 million units are produced and sold annually, which means 400 cars for every 1,000 people, the same level as in South Korea now," says Dong Yang, executive vice-president of the China Association of Automobile Manufacturers.

The overall market has slowed compared with previous years, when double-digit growth had been common. Sales edged 4.7 percent year-on-year last year, but the association estimates the rate will rebound to 6 percent in 2016, Dong said at an auto industry forum in Beijing.

He says the central government has demanded local authorities lift bans on used cars, which proved a hurdle to sales last year.

Reasonable growth "should not be and will not be too fast" and should stay consistent with GDP growth, he says.

Dong believes Chinese automakers will see the most rapid progress in their capacity for innovation during the 13th Five-Year Plan (2016-20), because "we'll see more money spent on innovation".

He says the auto industry should be a major player in the Made in China 2025 plan, which the central government unveiled last year to improve manufacturing and shift the country away from low-end manufacturing to more value-added production.

An Qingheng, a veteran of China's auto industry and the former chairman of BAIC Group, says the next five years will be key for Chinese automakers to advance technologically and for the country to become not only a large auto market, but also a nation where quality cars are produced.

Association data show that 3.3 million passenger cars made by Chinese brands were sold in the first four months of this year, a 44.3 percent market share, while Chinese SUVs accounted for 57.9 percent of all SUVs sold nationwide.

An says Chinese cars have been making progress in design and quality. A 2015 JD Power study showed Chinese cars on average had 131 problems in a year, 36 more than foreign brands. In 2008, the difference was 145 problems.

The industry veteran says many people think South Korea has done a good job in developing its own brands, but they did not realize it has taken the country more than 30 years.

"If Chinese brands want to stand out, they must work hard and spare no effort. Rome was not built in a day," he says.

He suggests that the Chinese government introduce policies to boost research and development, saying the reliance of Chinese automakers on foreign engines and transmissions hinders development.

An also urged Chinese companies to focus on new energy vehicles and smart cars, as there is a chance of success in the new wave of car making initiated by internet companies.

lifusheng@chinadaily.com.cn