China slowdown is just a blip

ERJ staff report (AN)

Beijing -- It was inevitable, right? China was too hot not to cool down.

And this country's once-torrid auto market, which surged 54 percent in 2009 and another 33 percent in 2010, hasn't just slowed. In the first quarter, auto sales actually fell.

But global automakers are more gung-ho than ever. They will lavish ever-increasing amounts of money and executive attention on the world's largest market.

"There is tremendous growth coming," Renault-Nissan CEO Carlos Ghosn said last week at the Beijing auto show. "China is not a source of worry."

No, China is not a bust. In the plans of global automakers, China is booming, booming, booming. For proof, look at the blitz of new assembly plants, expanded dealer networks and new models announced at the Beijing show.

Behind all the optimism are expectations that car sales in the big cities of China's vast interior are poised for takeoff.

"In China there are 300 cities with more than a million residents, and we are present in only 187 cities," said Peter Schwarzenbauer, Audi's global sales chief. "So we are still scratching the surface."

The consensus from Detroit to Wolfsburg to Tokyo: China's still hot. But the new normal will be annual market growth of 5 to 10 percent, not the double-digit pace of the past.

From Automotive News (A Crain publication)