China_Automotive_Outlook_Report_2011.pdfVIP

JUNE 2011 ? 2011 AlixPartners LLP Full Speed Ahead AlixPartners 2011 China Automotive Outlook INSIDE: Automotive Industry Trends Auto Parts Industry Update Executive Survey Full Speed Ahead 2 ? 2011 AlixPartners LLP AlixPartners 2011 China Automotive Outlook Even though light-vehicle sales in China slowed as purchase incentives ended in 2010, the industry outlook is far from gloomy. China’s population, particularly in urban areas, is getting wealthier and by 2016 the number of households with enough annual income to buy a car is set to double, according to the AlixPartners 2011 China Automotive Outlook. In its fourth consecutive year, the study and survey is based on extensive industry data as well as an in-depth survey of more than 40 senior executives from both foreign and domestic players in China’s automaker and auto-supply sectors. Competition is intense, with more than 30 domestic original equipment manufacturers (OEMs) vying for a share of a market that is also crowded with foreign brands. At 29%, domestic OEMs’ market share was the lowest among all major countries in 2010. Respon- dents to the survey expect electric and hybrid vehicles, with help from government subsidies, will likely achieve about 13% market share by 2016. While this appears to be a very optimistic expectation, it does indicate the strong support this sector receives in China. However, it should also be noted that only 12% of respondents think such vehicles will be economically viable without government subsidies by 2016. The market, however, is also loaded with opportunities pegged not only to the increasing wealth of China’s citizens but to its growing and aging population of cars. Growth rates for parts and services are expected to top 30% as the number of cars on the road in China grows to more than 145 million by 2015. AUTOMOTIVE INDUSTRY TRENDS China’s auto sales exceeded 15 million units in 2010, with passenger vehicle growth and sales the highest