Welcome to our regular look at what’s happening in the automotive research world.
As we get close to the end of the year, we are busy talking with industry experts in the smash repair industry, fleet managers, the road freight transport industry, monitoring developments in novated leasing, as well as keeping a close watch on the disruptive effects of automotive technology and telematics.
Amongst all of that activity, we have taken the opportunity this week to look at the major contribution of the Chinese car market to many car manufacturers.
The monthly updates of global car sales data published by Focus2Move shows that globally, Toyota continues to lead the way with Volkswagen and Ford a fairly distant second and third respectively. However, if we dig a little deeper, we can see the contribution of sales in China varies significantly by manufacturer.
China accounts for 25% of global automotive sales to date in 2013, yet Volkswagen generates nearly 40% of total global sales from China. Volkswagen was the first foreign car manufacturer to establish a presence in China with a car-making joint venture set up in 1984. By way of contrast, Renault at number 9 on the 2013 global sales chart, has only recently received approval for a joint venture with Dongfeng, according to CarNewsChina. Not surprisingly, only 2% of Renault’s global sales are in China, but expect that number to move northwards once local manufacturing starts.
According to the Chinese Association of Automobile Manufacturers for the first ten months of 2013, 2,610,800 Chinese brand cars were sold, up 9.6% year on year, accounting for 26.9% of the total sales of cars. The cumulative market share of German, Japanese, American, Korean and French cars was 25.4%, 17.4%, 16%, 9.8% and 4.2% respectively.
There are undoubtedly major opportunities for the automotive industry in China – average incomes are rising, around 130 cities have a population with over 1 million inhabitants and the west and south of the country continues along the path of rapid industrialisation. Yet car ownership is relatively low. There are currently around 55 cars per 1,000 inhabitants, compared with 568 cars per 1,000 in Australia. All of which points to significant growth, not just in terms of new passenger car sales, but also in the aftermarket, fleet management, road freight transport and other commercial vehicles, and automotive financial services.
China is also a test bed for new technology. Many of the leading car manufacturers are investing heavily in automotive innovations – see here for an insightful piece from McKinsey about GM’s approach to innovation in China. Chinese public authorities are setting strict emission limits and introducing quota policies to control car ownership in mega cities. This means China is leading the way in the development of electric and hybrid vehicles. The implication for the Australian automotive market is that we will increasingly see innovations originating in China in addition to Europe and North America.
On the theme of innovation, watch this space for new insights from ACA Research about how fleet managers are using telematics.