NW China to drive auto market growth

As China's auto market slows after a decade of unprecedented growth, the country's vast central and western regions are offering a new impetus to keep the boom rolling, industry watchers and insiders say.

The northwest, in particular, is playing a more important role for the auto industry as recent sales growth there has far exceeded that in the first- and second-tier cities as well as in eastern coastal regions, said Wang Xia, auto branch director of the China Council for the Promotion of International Trade (CCPIT).

Wang made the remarks at an auto forum on the sidelines of the Yinchuan International Auto Expo in Ningxia Hui Autonomous Region.

New car sales in first- and second-tier cities and in the coastal regions have risen only 2 percent since the beginning of the year, in contrast to 10 percent growth for the whole market, Wang said, citing figures from the CCPIT.

"The central and western regions, and the northwest in particular, have apparently bolstered the growth," Wang said.

In the first half of the year, a total of 8.05 million new cars hit the road nationwide, 2 percent down on last year. Of that number 913,000 vehicles, 11.3 percent of the total, were registered in northwestern regions, up 78 percent year-on-year.

"The northwestern has become an important car market, and continued urbanization will inject new drive for auto consumption," said Zhang Jian, deputy general manager of Beijing Automotive Industry Corp.

Industry watchers say the less developed northwestern regions have great potential, and automakers should focus their efforts there.

The northwestern has witnessed a fast expansion of its auto sales network. Over the past five years, the sales network has expanded 16 percent in the region, about five percentage points higher than the national average. The number of auto 4S stores in Yinchuan, capital city of Ningxia, more than doubled to about 100 in 2012 from a year ago.

"This trend of fast expansion will be more visible in the next five years," Zhang said.

Apart from an important auto market, the northwest also has advantages in land and labor costs for the development of auto industry, currently centered on the east coast, said Chen Yao, a researcher with the Chinese Academy of Social Sciences.

Car manufacture was listed among the advantageous industries for foreign investment in the regions in March this year, indicating that governments are in full support of the development of the industry.

Chen however noted that the northwest, as a late starter, needed more preferential policies from the central government in developing their own auto industries, improving infrastructure, industry expertise and talent.