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China is set to become the world’s second largest new automobile growth market by the end of 2006 and this growth is spurring demand for automotive parts, services, and after-care products. China is presently capable of manufacturing a complete line of automobile products and large automotive enterprises. Major domestic firms include the China First Automobile Group Corp. (FAW), Dongfeng Motor Corp. (DMC) and Shanghai Automotive Industry (Group) Corp. (SAIC).
China had a total of 6322 automotive enterprises by the end of November 2006. The total output value of the automotive sector for the first three quarters of 2006 was US$143 billion. Since 2002, 50% of all motor vehicles (cars and trucks) in China had been purchased by individuals. As incomes increase the high annual growth rate of private ownership is expected to accelerate.
Alternative fuel vehicles
China encourages the development of clean and fuel efficient vehicles in an effort to sustain continued growth of the country’s automobile industry (see Fuel economy in automobiles). By the end of 2007, China plans to reduce the average fuel consumption per 100 km for all types of vehicles by 10%. The proportion of vehicles burning alternative fuel will be increased to help optimize the country’s energy consumption. Priority will be given to facilitating the research and development of electric and hybrid vehicles as well as alternative fuel vehicles, especially CNG/LNG. Major cities like Beijing and Shanghai already require Euro III emission standards.
Auto parts
Currently auto parts and accessories enjoy lower levels of tariffs than cars (the average tariff is 10-13% for parts/accessories and 25% for cars). China has agreed to lower tariffs on imported auto parts and accessories to 10%. Although this difference in duty rate was initially responsible for an increase in car kit imports, the loophole has been tightened. Now, only replacement parts and accessories enter China under the lower duty level.
Used motor vehicles and used/refurbished auto parts
Although there are case-by-case exceptions for antiques and diplomats, it is currently illegal to import used motor vehicles into China. Refurbished heavy construction equipment can be imported with a special permit. Used and refurbished auto parts are not allowed to be imported into China.
Automotive after-sales products and services
Although improvements have been made in this field in the past decade, China's after-sales products and services still lag far behind those of developed countries. However, WTO commitments have brought about significant changes in the after-sale market. China’s aftercare market now faces the following challenges:
Establishing an information feedback system with end-users in order to improve service;
March 10, 1958: The first 2½ tonnes light duty truck (NJ130), which was based on the Russian GAZ (GAZ-51?), was produced in Nanjing. Named 'Guerin' brand by China's First Ministry of Industrial Machinery.
June 1958: Nanjing Automobile Work, which previously was a unit in the Third Field Army, was established. The truck production continued until the last truck (NJ134) rolled off the assembly line on July 9, 1987. Cumulative production was 161,988 (Includes versions like: NJ130, 230, 135 and 134).
In 2005, 5,707,688 motor vehicles were manufactured in China. The following 13 foreign makers have join venture factories, with local partners, in China.
Toyota
Currently Toyota is the only company making hybrids in China. It sold 2,000 in 2006.
