Reuters blog archive
from Global Investing:
The world's largest car market, China, with a population of 1.3 billion people and an emerging middle class, holds great potential for investors and consumers alike with annual growth rates in the auto sector expected to hold at around 23 percent to 2017, according to Alliance Bernstein Asset Managers.
Joint ventures (JV), the most popular structure for foreign firms investing in the automobile sector in the world's largest car market, are set to capitalise on a growing consumer base in a country with 3.3 million kilometres of asphalt. Traversing the so-called 'mother' road 312 (China's route 66) is becoming more of an attainable dream for the Chinese consumer.
VW has a JV with Changchun-based FAW, Dongfeng with Nissan, GAC with Toyota and Honda. There are many investment opportunities, though a constantly changing sectoral environment and risks of mechanical recalls can cause sharp fluctuations as in any market, according to Bernstein Research, a subsidiary of Alliance Bernstein holdings.
China now has some 21,100 dealers nationwide, more than the United States (17,500), Germany (12,900), and the UK (4,700) in absolute numbers. Domestic dealers are overshadowed by international brands in the larger cities. The next step is for the international JV-backed dealers to make regional expansion where domestic dealers are currently concentrated.