China growth feeds auto demand

By Rhoda Miel
News Editor

Published: May 17, 2012 6:00 am ET

John Zeng of LMC Automotive at the China Plastics in Automotive Conference, held April 17 in Shanghai (Plastics News photo by Laurence Mak/Ginger Advertising)

Related to this story

Topics Automotive

SHANGHAI (May 17, 3:35 p.m. ET) — To understand the rate of economic growth China is experiencing, John Zeng looks to the United States’ past.

Between 1880 and 1970, the U.S. went through an economic surge that saw it from the days of the pioneers to urbanization to a complete modernization that spread from large cities to small rural towns of the Midwest.

China today sits at the same tipping point as the U.S. in 1900, said Zeng director of Asia Pacific forecasting for analyst group LMC Automotive — with half of its population in cities, with access to everything modern life offers, and half in rural areas. The U.S. took the next six decades to modernize everywhere.

“China, within 20 years, will do what it took the U.S. 60 years to do,” he said during Plastics News’  China Plastics in Automotive Conference April 17 in Shanghai.

China produced more than 18 million cars in 2011, and while demand may have cooled at the start of 2012, forecasters still expect the country’s auto market will hit 30 million cars by the end of this decade.

That supercharged growth will continue feeding the demand for new car production in China, but central and provincial governments will also struggle to control traffic congestion and rising demand for energy.

Those realities, in turn, will force the auto industry in China to embrace new technologies as it creates the future car for China, with turbo chargers to get more miles out of gasoline-powered engines as well as a need for engines that run on alternate fuels.

Each of those vehicles will require lighter weight materials to meet expectations from both the government and consumers to get more performance out of engines, but also must embrace design and ergonomic cues the Chinese consumer wants.

A young buyer selecting a first car in China is not the same as a young person in California looking to differentiate his tastes from those of his parents, noted Klaus Paur, the Shanghai-based global head of automotive for consulting group Ipsos.

“The young consumers’ buying behaviors are a blend of traditional values and new,” he said. “They want the acceptance of their family and friends. They want to fit into their social group.”

There are some key design cues that automakers and suppliers are recognizing, Paur said. Chinese consumers are drawn more to large headlights and a large chrome-plated front grille. Likewise, chrome and metallic-highlighted interior trim is preferred over wood trim, which is considered “stodgy.”

The new buyers in China are open to multiple brands, especially international brands, he said. The typical consumer will consider four or five brands, said Jim Press, president of international operations for car dealership group McLarty Automotive Partners.

More than 80 percent of car buyers in China are buying their first car, Zeng said. That compares to 12 percent of car buyers in Germany and 10 percent in Japan.

The central government has set targets for the future vehicles, including a requirement that 25 percent of the vehicles sold by 2018 be electric vehicles, although that target may be difficult to hit, he said. It is also promoting the use of methanol as an alternative fuel, with trial developments in three cities now.

Much of the growth of China’s domestic car market so far has been driven by the key cities of Shanghai, Beijing and Guangzhou. As development and modernization moves beyond those cities, demand will only expand.

There are 627 cities in China classified as Tier 2 or Tier 3 — with populations ranging from 500,000 to 2 million, Press said. Many of those cities do not even have an auto dealership yet, but have consumers already anxious to buy their first car.

China’s auto industry is just beginning its long growth in those cities, with 8 percent growth this year, said Shi Jianhua, vice secretary general of the China Association of Automobile Manufacturers.

“And then there are the Tier 4 and Tier 5 cities,” said Jack Cheng, general manager of GAC Fiat Automobiles Co. Ltd., which is building a new plant in Changsha to makes Fiat cars. “Those guys are hungry.”


Comments

China growth feeds auto demand

By Rhoda Miel
News Editor

Published: May 17, 2012 6:00 am ET

Post Your Comments


Back to story


More stories

Image

Illinois injection molder expands

July 21, 2014 1:23 pm ET

Automotive supplier All-Rite Industries Inc. has added two new injection molding machines to its operations.    More

Image

More head-up displays going into cars, with improved information, graphics

July 21, 2014 10:48 am ET

Head-up displays with "augmented reality," the technology that employs much of the windshield as a display area for data and images, is poised to...    More

Image

This is one bump that looks good on a car

July 18, 2014 1:34 pm ET

PSA Peugeot Citroen Group is using plastic for both design and protection on the exterior of one of its newest cars.    More

Image

New Smart cars start production

July 18, 2014 10:46 am ET

Daimler AG has launched new versions of its Smart ForTwo and ForFour city cars, which, as in previous models, make extensive use of plastics in...    More

Image

Continental Structural Plastics buying 5 Magna SMC plants

July 17, 2014 4:35 pm ET

Automotive and construction supplier Continental Structural Plastics has signed an agreement to buy five sheet molding compound facilities from the ex...    More

Market Reports

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Plastics Recycling Market Review & Outlook 2014

This special report from Plastics News examines the North American plastics recycling industry and provides insight into indicators that impact market viability, including Resin pricing trends for virgin and recycled market material and historical Resin production trends for post- consumer and industrial waste.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events