Analysis of the Future of Automobile Manufacturing in China

The automobile industry in China is expected to grow significantly in the future decade, driven by increasing demand and government policies. The domestic market has been impacted by foreign automakers entering the market with affordable cars, but local brands are working to close the quality gap. The Chinese government is also implementing policies to reduce pollution and traffic congestion, which will impact the industry. By 2020, over 35 million vehicles are expected to be sold per year in China, making it a major player in the global automotive market.

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Analysis of the Future of Automobile Manufacturing in China
Executive Summary of the Report
In the year 1964, the automakers took the centre stage in the New York Fair. The General
Motors demonstrated the concept of Firebird IV and the company stated in order to explain the
meaning of the concept that, ("Strategy& - the global strategy consulting team at PwC", 2016)
“awaits the day when the family would drive to the highways by turning over the controls of the
care to a programmed and automatic system and further travel in absolute and comfort safety
more than the speed which will be possible on the expressways.” In contrast, Ford launched a
vehicle i.e. Mustang for the future. Around fifty years of creation and innovation in the rider,
safety and horsepower amenities have supported the automobile industry to increase the sales by
the annual rate of four percent since the year of 1964. Further, the rate is double of the
population growth globally.
Moreover, from the past twenty years, the sales in the Japan, Europe and North America have
been moderately flat. The growth is shifting to the China from the emerging markets. The
emergence of China as the largest market of automotive across the globe is also fueling the
acceleration of the domestic industry of automobiles in order to compete the global players. For
more than a decade, European OEMs, Japanese, and North America created a triad and generated
a majority in the sector of automobiles across the world.
According to the government report, it has been analysed that the year 2014 was the worst year
for the domestic automobile market of China. As the foreign automakers are coming up with the
affordable cars, entering into a place which is used to be a redoubt of China. Further, like
affluence, the consumers of the Chinese market were supporting the foreign designers who are

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felt like more stylish and safer (Optimism et al., 2016). Moreover, five years ago, cut the
subsidies which hugely supported the local brands. For example, Chongqing's western city stated
that they provided the subsidy to 3,000 yuan for the purchasers of various models of the vans
which were designed by the local makers. The Changchun’s northern city provided the subsidy
of around 3,500 to 7,000 yuan for the purchasers of the cars. Therefore, this proved to be very
beneficial for the China (Optimism et al., 2016).
The automobile companies of China are working in order to close the quality gap. As the quality
survey stated in the year 2013, the Chinese brands had 130 problems per 100 cars whereas,
foreign brands had 95 problems or defects per 100 cars. It has been analysed that from the last
twenty years, the automobile industry was being dominated by the Accord and Camry. The
major cities of China are restricting the numerous of new plates of license in order to minimise
the pollution and traffic. Whereas, some of the cities are using the system of bidding for the
purpose of licensing. According to the research (Optimism et al., 2016), this limit impacted the
local brands as they encouraged the buyers of the car to purchase in bulk and luxurious cars in
order to get the license plate on the cheaper ride. Furthermore, the watchers of the industry stated
that it is a huge shakeout for the domestic car makers of China as the production was stopped by
the famous automobile companies i.e. Meiya, Hafei and Shuanghuan. But the FAW Group Corp.
has a great market share because it is the partner of Toyota Motor Corp. and the Volkswagen AG
(Bradley et al., 2005). Further, the competition is forcing the makers of the automobiles in order
to push the sedan technology of mass market which was not long and was limited to the luxury
cars only.
HIS automotive estimates that more than 35 million vehicles will be sold per year in China by
the year 2020, and it was around 20 million in the year 2013. The promise of China has

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fascinated the players, and as a result, the margin will increase naturally. Further, the importance
of the country will transcend the results of the short term. In the future decade, the emergence of
China as the centre of production and the dominant market will be having the great implications
in order to design the cars. The standards of the Chinese mainly at the luxury end where the
makers of the automobile industry are increasing the bar and will get the global affluence.

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REFERENCES
Bradley, D., Bruns, M., Fleming, A., Ling, J., Margolin, L., Roman, F., & Flury, A. (2005).
Automotive Industry Analysis. Available at:[Accessed 20 Aug. 2013].
Optimism, O., Secretary, T., Benefit, C., Years, U., Services, B., & March, I. (2016). The Wall
Street Journal & Breaking News, Business, Financial and Economic News, World News and
Video. The Wall Street Journal. Retrieved 30 November 2016, from http://www.wsj.com/
Optimism, O., Secretary, T., Benefit, C., Years, U., Services, B., & March, I. (2016). The Wall
Street Journal & Breaking News, Business, Financial and Economic News, World News and
Video. The Wall Street Journal. Retrieved 30 November 2016, from http://www.wsj.com/
Optimism, O., Secretary, T., Benefit, C., Years, U., Services, B., & March, I. (2016). The Wall
Street Journal & Breaking News, Business, Financial and Economic News, World News and
Video. The Wall Street Journal. Retrieved 30 November 2016, from http://www.wsj.com/
Strategy& - the global strategy consulting team at PwC. (2016). Strategyand.pwc.com. Retrieved
30 November 2016, from http://www.strategyand.pwc.com/