China’s Expanding Car Market and the Response from Japanese Companies

ABSTRACT

1. The size of China’s car market is growing robustly. The penetration rate of cars, however, is still low, and there is great potential for further market expansion in the future. The Chinese car market is dominated by compact vehicles, and is characterized by fierce price wars and so on. Automotive industrial policy is having a significant impact on the development of the market.

2. The leading automakers are joint ventures with foreign companies, while domestic companies not receiving foreign investment and with their own original brands have been rapidly growing in recent years. Segregated relationships between foreign and domestic companies have been formed.

3. Various new changes have recently appeared in the Chinese car market and industry, such as the development of original brands, strengthening of environmental measures, consolidations, and exports and overseas expansion. These changes can be expected to have a positive effect on future market growth.

4. Japanese automakers show strong development in China, and are a potent force in terms of market share growth. As major players in the Chinese market, further growth will require that these companies take advantage of their competitive edge and overcome certain problems.