The China Syndrome

A year end brings a special feel with it. The tone is usually bitter-sweet. After all, a year-end signifies the close of a period of activity and portends more happening around the corner. In the unending cycle of the annual crossover, 2010 had a unique feel about it.

It stays differentiated in many respects. For starters, 2010 was the year in which most of us in the region and around the world breathed a big sigh of relief and got back to the job of living. Unlike the bulk of the preceding year where the world’s population waited with bated breath to see whether their country would fall victim to the global malaise, 2010 saw folks just that little more ready to put their money back on the line.

For the car industry, 2010 as a whole was a year of revival, renewal and reward. Thankfully people seem to have got 2008 flushed out of their systems. That single bumper year will remain a fond memory in the minds of industry insiders who now see any growth at all as reward for staying the path. Various brands have also had to rejig the way in which they do business. Increasingly BRIC is becoming a noun that appears on the first page of the corporate business plan and one single part of that name has redefined the economics of the car industry. China, the factory of the world, has well and truly come out from behind the bamboo curtain. With more than 13 million cars sold, the country has become the destination for car manufacturers. In fact most car makers who are reporting healthy earnings this year are doing it in Rembi. With predictions of a further 25% growth during 2011, the only thing stopping the Chinese is the inability of infrastructure to grow at an equal pace. Beijing has already announced plans to slash the number of registrations it will allow, in order to reduce gridlock. More cities may fall in line, with some even considering limiting road usage depending on various combinations of car numbers and days of the week.

China’s car market will still continue to grow for many years, despite all the restrictions and the trend to green vehicles. And like we have discussed before, once the acceptance barrier that prevents many of us in the so-called developed economies from buying China-made cars drops, the sheer size of the investment in China will instantly take it to the top of the metal heap.

Will 2011 be China’s year on the international stage? It is unlikely to be. However, it is all set to be the biggest single market.

What do we put on the wish list for 2011 then? For starters we would like to see more new cars being launched. Understandably there is a backlog of sorts with the dry spell we had over 2009-2010 but now we should see cars sporting smaller, fuel-efficient engines, with lots of electronics on-board and far better styling.

Of course, despite all our wishes, some of them are going to be not so good driving fun, but we can live with that. We would also like to see Santa Claus or his regional distributor bring good cheer to the car sellers in the region. Most have had a tough time in 2010, either managing a little growth or more importantly undoing the wrongs of large stockpiles of aging cars. 2011 will hopefully be a year of renewal for them too. And we hope our readers choose a new car this year too.

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