Due to rising purchasing power, continued urbanization and government policy initiatives, passenger car sales in China are expected to increase 20% in 2014, from the expected 10% in 2012.
Despite a serious 46% sales fall in 2009 and only 2.5% in 2011, China shows that its auto market is not close to saturation. Between 2003 and 2011 China’s vehicle penetration rate grew five-folds to 56 cars per 1,000 people, which was still below the 2009 global rate of 125 cars per 1,000 people. BBVA predicted that in the following three years China’s car ownership rate will reach 113 cars per 1,000 people, due to the development experience of emerging Asian economies such as South Korea and Taiwan.
The slowdown of auto sales in China was due to the removal of subsidies for auto purchases and to tight credit conditions. But now, since China has revived some subsidy programs and eased its monetary policies, sales are expected to rapidly grow in the next year. In May 2012 China released a subsidy program worth 6 billion yuan (US$944 million), to finance customers who want to buy vehicles with an engine capacity of 1.6 liters or less.