China By the Numbers
February 20, 2007
Everyone knows China’s automobile industry is booming. The China Association of Automobile Manufacturers confirmed that in today’s report that showed China’s 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 world’s second largest auto market. Sales should surpass 8 million this year, and analysts predict it will be the world’s largest market in another decade.
But buried in the CAAM’s glowing report China’s auto industry is the fact that the good fortunes don’t 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.
Posted by Michelle Krebs at 5:47 AM under Analysis , Business , News | Comments (1) | digg this | Seed Newsvine
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.
Posted by: China Law Blog | February 20, 2007 at 11:27 PM