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China's Auto Sector--Stalling Out or Gearing Up?

posted May 30, 2011 05:05:25 by gabe
China's car sales only rose by 2.8% year-on-year in April 2011, albeit with a volume of 1.14 million vehicles sold. Chen Hong, President of SAIC, one of China's largest automakers,recently said "The environment of China's auto industry has turned from positive to neutral, and there are signs of an obvious slowdown." (Reuters) In Mr. Chen's assessment, car sales in China will rise by only 7.4% in 2011, a sharp slowdown from the roughly 33% year-on-year increase in 2010. Reasons that are likely to drive the sales slowdown include inflation, weaker consumer confidence, the end of certain government incentive programs for car buyers, and high oil prices.

We are curious to see what readers think about the outlook for China's auto sector over the next few years--is 2011 a year where the industry and buyers catch their breath before strong growth resumes, or are we seeing a structural change that sees China become a high-volume, slower growth car market? The implications for China's oil demand and global oil prices are substantial.
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