China By the Numbers
By Michelle Krebs February 20, 2007Everyone knows Chinaâs automobile industry is booming. The China Association of Automobile Manufacturers confirmed that in todayâs report that showed Chinaâs auto industry made a profit equivalent to $10 billion (U.S.) in 2006, up 46 percent from the previous year.
In contrast, Ford Motor Co. alone lost more than that; it lost $12.7 billion last year, Chrysler lost $1.4 billion and GM has yet to report earnings but lost $10.6 billion in 2005.
China car sales totaled 7.22 million vehicles in 2006, up 25 percent. Higher sales resulted in China overtaking Japan as the worldâs second largest auto market. Sales should surpass 8 million this year, and analysts predict it will be the worldâs largest market in another decade.
But buried in the CAAMâs glowing report Chinaâs auto industry is the fact that the good fortunes donât trickle down to car dealers, with 40 percent losing money. China has 1,800 franchised auto dealers, of which 700 are unprofitable and of those 300 have been merged or edged out of the market. Another 20 percent are on the brink of red ink. The reason: fierce competition.
Not only is vehicle distribution ripe for consolidation, so too are auto companies. China has 1,500 registered auto producers. Of which fewer than 100 sold more than 10,000 vehicles. Many small, manufacturers sold only 300 to 500 cars, not enough to make a valid business case in any country.
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Your description of China auto is completely accurate. There are a huge number of car manufacturers, many of which have no clue what they are doing and most of which are producing cars that would never sell outside China. But, some few of them are very quickly improving.
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