PwC Predicts China to Become No. 1 Light Vehicle Maker in 2009

China is expected to become the No. 1 light vehicle manufacturing country in 2009, surpassing the United States, says PricewaterhouseCoopers.


According to PwC, although the 2009 outlook for established regions of North America and the European Union is stabilising, China's remarkable advancement in a downturn has prompted an upward revision to PwC's AUTOFACTS global assembly topline.  However, looking into 2010, PwC says that uncertainty around the strength of economic fundamentals and the scope of government influence will persist.
Steve D'Arcy, global auto leader, PricewaterhouseCoopers, says that the global automotive sector continues to generate surprises in 2009.  D'Arcy says that at the year's outset, their expectations for China's industry development, and indeed consensus opinion, was for a period of sideways movement—certainly not the "great leap forward" that has subsequently been witnessed.
"Given the toughness of the US and Japanese markets, China will supplant perennial assembly leaders and become the No.1 light vehicle manufacturing country in 2009—a position that will only be relinquished in the future under extraordinary circumstances," remarks D'Arcy.
According to D'Arcy, PwC's Q1 lateral prognosis for Chinese light vehicle assembly suggested a likely outcome of some 7.6 million units, but the success of the central government's stimulus programme in igniting sales in China's interior markets has driven PwC's latest Q4 forecast above initial projections by 2 million units.
"The automotive stimulus package that China has enacted has obviously had the appropriate effect.  But it is not only the lower-segment domestic cars that are doing well. Chinese executives continue to buy higher-end segment vehicles from global brands," says Jeff Herrmann, China auto leader, PricewaterhouseCoopers China. These brands, Herrman adds, are doing very well on import sales.  He notes that with early predictions of over 8% GDP growth for 2010, the key question headed into 2010 will be whether the stimulus enacted at the beginning of 2009 will still have the same effect.
PwC says that assembly and sales growth in China and India has strongly benefitted domestic automakers, in part due to specific government incentives as well as stabilisation in the overall economy. The Chinese market has responded to the bold initiatives instituted by Beijing with YTD sales up nearly 35%, while the Indian market has also reversed its declining trend to post a growth of 8% through August.


Meanwhile, smaller markets in Asia Pacific are yet to return to normal levels of demand.


While much confidence can be given to China's future prospects, uncertainty still clouds the outlook for other major vehicle-producing countries in 2010, says PwC. In North America, assembly is expected to bottom in 2009 as lingering recessionary trending pushes volumes to an historic low of 8.3 million units.

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