FocusChina’s car sector to see healthy growth in 2012

25 January 2012 04:10  [Source: ICIS news]

By Fanny Zhang

China’s car sector to see healthy growth in 2012GUANGZHOU (ICIS)--China’s car sales are expected to grow faster this year, after posting a disappointing 2.45% growth in 2011, industry sources said on Wednesday.

China, which has the world’s biggest car market, saw its car production increase just by 0.84% last year. Production and sales in 2011 were at their lowest in 13 years, according to data from the China Association of Automobile Manufacturers (CAAM).

The country’s car sales grew by 32% in 2010 and 48% in 2009.

The CAAM said the Chinese government’s macroeconomic policies and its removal of its stimulus policy on car purchases are the key reasons for the slowdown of car sales in 2011, although it is likely to see solid growth this year.

 “We predict an 8-10% growth this year [2012],” said Jiang Xueqin, a car market analyst at Shanghai-based SWS Research.

Jiang said the government will gradually loosen its credit policies as inflation eases to a comfortable level. In addition, there is potential for car sales in the country to increase further because of lower penetration per capita.

“Although China’s car sales look quite stellar, its car population per capita remains low compared with [those of] developed economies,” Jiang said.  

Car producers and dealers also expect sales to grow faster this year, saying that the deceleration in 2011 will not be repeated in 2012.

“We think that growth will be concentrated on high-end products [such as] luxury SUVs [sport utility vehicles]. Sales of low-end products with 1.0-1.6 litre engines will likely decline in China,” said Guo Fei, a Zhuhai-based sales manager at Chrysler.

The car market is a large end-market for plastics and polymers.

The American Chemistry Council (ACC) estimates that each automobile contains an average of $3,297 (€2,539) worth of chemicals, such as styrene butadiene rubber (SBR), acrylonitrile-butadiene-styrene (ABS), nylon (polyamide), polycarbonate (PC) and other synthetic fibres, paints and coatings.

Industry sources said they are cautiously optimistic about demand for chemicals in car applications this year.

“We see some adverse impact on China’s car sector, [such as uncertainty over the] overall economy and troubles in western countries. However, we still believe we can maintain the same growth on [car] sales,” said a source from plastics producer Borouge.

Borouge is a joint venture between Abu Dhabi National Oil Company (Adnoc) and Austria-based Borealis.

Borouge posted a strong growth for sales of plastics for car applications in 2011, the source said, without giving specific figures.

The company’s plastics sales in 2011 were higher than in 2010 when China’s car market expanded by more than 30%, the source added.

The plastics industry will focus on technical innovation to make cars consume less fuel to drive demand, the source said.

 ($1 = €0.77)

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Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Fanny Zhang
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