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China is driving growth for GM now/future

Posted by Bill Sluben on September 3, 2009

Going Nowhere Fast in China
Going Nowhere Fast in China

40% growth rate in China this year!  GM is taking that to the bank.  To date, over 1.1 million GM vehicles have been sold in China.   And according to China Daily, the party might just be getting started for all automotive manufacturers.  Consider that car ownership is just 2.9 percent of the population – one of the lowest rates in the world – says Credit Suisse, which expects ownership to surge fivefold in the next decadeto reach 148 cars per 1,000 residents by 2020.  Credit Suisse estimates that 40 percent of urban households in China can afford a medium-priced car if auto financing is available, and 90 percent of rural households can afford the cheapest cars on the market.  Mind boggling potential when one considers that the population is over 1 billion people.

As it is already, the Chinese market is expected to top out at 11.8 million sales, the highest in the world and some 1 million more than the U.S. market.  However, the profit margins are generally slim as the majority of new vehicles are small and inexpensive.  It may be a volume game for manufacturers for a long while until Chinese personal incomes advance from the $5000 – $65000/annual right now (and that is in the urban areas).


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