China Has More Space Than U.S. for Adding Car Ownership

By Bloomberg News  

China’s lead on the U.S. new-car market is forecast to widen to a record 4.6 million units this year. With a vehicle ownership rate of about a 10th of their American peers, there’s room to grow.
The CHART OF THE DAY shows sales of new cars and light-trucks the past decade and forecasts for 2015. The lower panel compares nationwide vehicle penetration rates, with only 69 in 1,000 vehicles per Chinese, compared to 786 per 1,000 Americans, according to World Bank data available up to 2011. About two of every three buyers in China were, until recently, first-time auto owners, according to General Motors Co. (GM)
“With ownership penetration in the U.S. already high, it’s more of a replacement market,” said Klaus Paur, the London-based global head of automotive at researcher Iposos. “Pent-up demand has been satisfied over the past few years, hence we see slower growth in the U.S. this year. China still has plenty of first-time buyers, there’s opportunity for growth especially in smaller cities.”
The China Association of Automobile Manufacturers expects new-car sales to rise 8 percent to 21.3 million units, down from 9.9 percent in 2014 and barely ahead
of the 7 percent growth forecast for the economy. The U.S. market’s expected expansion of 1.2 percent based on a survey of 12 analysts by Bloomberg, compares with 5.9 percent in 2014. The forecast 16.7 million cars would be less than the record high 17.3 million in 2000.
In the U.S., about three used cars are sold for every new one, according to researcher LMC Automotive. China’s used market is fledgling but growing, with a slim majority of buyers in so-called tier-one cities now on their second new cars, Ammann says. While the American ownership rate dwarfs the Chinese peer, restrictions on registrations and government policies to curb pollution and congestion will cap growth.
“Over the last 15 years, China has contributed a substantial majority, 72 percent of the total industry growth over that period. We see that flattening out over the next few years,” Daniel Ammann, president of Detroit-based GM told an auto conference on Jan. 14. The global industry will continue to grow, but “at a much slower rate over the next few years,” with China participating in the deceleration, he said.