China's Car Market Is Humming Again

In Shanghai
In Shanghai
Yang Xiaolin

BEIJING — China's automobile market is now expected to see double-digit growth by the end of this year, after two consecutive years' of relatively low growth. According to data published last week by the China Automobile Association, for the first 10 months of 2013, China’s car sales totaled 17.8 million vehicles, with a growth rate of 13.47% compared with the same period last year, and far beyond the 5% to 8% growth originally forecast.

Still, the longer road for the Chinese automobile sector is not all clear. After the car market’s “ten golden years” of the last decade, what will the expected “ten silver years” turn out to be? Is the reappearance of double-digital growth actually sustainable — or just a final mirage?

The reason for caution in the sector is that China’s overall economy is slowing down, and the car-buying impulse will be tamed. According to the predictions of industry experts, car sale volume can typically be predicted in proportion to the annual GDP: Automobile market growth ratio is usually 1.5 times that of the annual GDP growth rate.

China’s car market, however, has not followed this “rational growth,” neither in the golden decade nor in the past three years. The boom of Chinese family car ownership has brought significant negative impacts on both urban transport systems and the environment. This has in turn prompted “car purchase restriction orders” from the biggest cities like Beijing, Shanghai and Guangzhou, with many of the second and third-tier cities now also following suit.

“Because of this, it is impossible to predict how much the market will grow,” says one car sales manager.

Traffic in Beijing — Photo: Jakob Montrasio

Over the past decade, China’s car market has seen several rapid accelerations, before a hard step on the brake. Though most people in the industry expect that the growth should be maintained at double-digits for next year, another common perception is that it is simply impossible to ever again see annual increases of 30%.

Shifting westwards

Because of the government measures tightening car purchase in the major coastal cities, more and more domestic Chinese automakers are targeting smaller towns. Due to China’s expected large-scale urbanization in the years to come, the car industry is betting in particular that their future growth will come from the smaller cities in the central and western parts of the country. One study predicted that next year consumers of China’s third and fourth-tier cities will make up 68% of China’s total car buyers.

“China’s upcoming urbanization will lead to a flow of people, logistics, money and information. It will bring for the car industry an immense business opportunity,” says Gu Shengzu, Vice-President of the Financial Committee of China’s National People's Congress. He believes that the third and fourth-tier cities as well as the vast rural areas are the major opportunity of the car industry, and in particular for China’s own brands.

“Our own brands understand the Chinese market and the local consumers better so that they have a more accurate product positioning,” he said.

Of course, in the major cities, thanks to the considerable demand for upgrades of features, high-class and luxury foreign brands will also have a good stake in China’s urbanization process.

According to the report of Banco Bilbao Vizcaya Argentaria released last August, in 2011 China's automobile penetration rate reached 56 cars per thousand persons — almost five-fold compared with 2003. But in contrast, in 2009, the world automobile average penetration rate was 125 cars per thousand people, which shows how huge the Chinese market potential still is.

Meanwhile, both energy and environmental concerns mean that car purchases will continue to be constrained by government regulations. This will provide a rare historical opportunity for those manufacturers who actively respond to environmental changes by rolling out cars that are more environmentally friendly, energy efficient and intelligently designed.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!

A Mother In Spain Denied Child Custody Because She Lives In Rural Area

A court in Spain usurps custody of the one-year-old boy living with his mother in the "deep" part of the Galicia region, forced to instead live with his father in the southern city of Marbella, which the judge says is "cosmopolitan" with good schools and medical care. Women's rights groups have taken up the mother's case.

A child in Galician countryside

Laure Gautherin

A Spanish court has ordered the withdrawal of a mother's custody of her one-year-old boy because she is living in the countryside in northwestern Spain, where the judge says the child won't have "opportunities for the proper development of his personality."

The case, reported Monday in La Voz de Galicia, has sparked outrage from a women's rights association but has also set off reactions from politicians of different stripes across the province of Galicia, defending the values of rural life.

Judge María Belén Ureña Carazo, of the family court of Marbella, a city on the southern coast of 141,000 people, has ordered the toddler to stay with father who lives in the city rather than with his mother because she was living in "deep Galicia" where the child would lack opportunities to "grow up in a happy environment."

Front page of La Voz de Galicia - October 25, 2021

Front page of La Voz de Galicia - Monday 25 October, 2021

La Voz de Galicia

Better in a "cosmopolitan" city?

The judge said Marbella, where the father lives, was a "cosmopolitan city" with "a good hospital" as well as "all kinds of schools" and thus provided a better environment for the child to thrive.

The mother has submitted a formal complaint to the General Council of the Judiciary that the family court magistrate had acted with "absolute contempt," her lawyer told La Voz de Galicia.

The mother quickly accumulated support from local politicians and civic organizations. The Clara Campoamor association described the judge's arguments as offensive, intolerable and typical of "an ignorant person who has not traveled much."

The Xunta de Galicia, the regional government, has addressed the case, saying that any place in Galicia meets the conditions to educate a minor. The Socialist party politician Pablo Arangüena tweeted that "it would not hurt part of the judiciary to spend a summer in Galicia."

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!