The world's top auto market is slowing down -- although the smog that blurs distant buildings in China's cities is a reminder that years of blockbuster auto sales have secured the country's first-place ranking for the long haul.
For Ford and Chrysler, which are still getting established, the slowing market means they largely missed out on a stretch of record growth, and, in some cases, profits.
Chrysler is leaning on a small business importing Jeeps, while its part owner Fiat is introducing its 500 minicar in China this year and won't have a locally built car to sell until next year. Ford's 2010 light-vehicle share was 3.4 percent.
"We could have gone faster and should have gone faster in China," said Joe Hinrichs, CEO of Ford China.
For General Motors, whose sales in China last year made up 28 percent of its worldwide volume, the slowdown might mean a chance to catch its breath. After having doubled its sales in two years, GM is planning to take five years to accomplish the feat again.
Chinese governments have deliberately slowed their country's auto market by cutting off incentives, twice increasing gas prices and limiting license plate registrations in congested Beijing.
After more than an eightfold increase in auto sales over the last decade, China has developed a true car culture.
Amid the buzz for last month's Shanghai auto show, ads for a single car papered entire subway stations in this city of 19 million people. Outside a luxury hotel, an employee nearly cried as she took photos of a red Ferrari. "Oh, it's beautiful!" she exclaimed.
Auto plants throughout China, with potted bamboo or fish tanks in break areas, are viewed as essential to the development of small cities of a million or more people.
After a decade of double-digit annual sales growth, excepting one year, light-vehicle sales in China topped 17 million last year. While that represented a 33% year-over-year annual increase, it was smaller than the 48% surge in 2009.
Still, China's growth is slowing.
Government actions held growth in the first quarter to about 8%, compared with a 20% increase in the recovering U.S. market, where sales haven't hit 17 million since 2001. Last year, U.S. sales were a below-average 11.6 million.
China's annual sales growth is expected to hover around 5% to 15% for the next several years, likely marking an end to the kind of year-over-year sales explosion automakers recently enjoyed. The more normal growth will still offer millions of additional buyers every year and will about double the overall market in the next decade.
"We are not talking about a recession," said Lorenzo Sistino, who runs Fiat's international operations.
China applies the brakes
As the global auto market struggled to recover from its recent recession, China thrived, partially because of the government's new-car subsidies.
This year, authorities want to cool the economy to prevent inflation. China has raised commercial lending rates four times in the past six months and increased gas prices three times last year and twice already this year. A variety of car-buying subsidies have ended, starting with incentives on light commercial vehicles and cars with small engines.
In addition, the government of the capital city of Beijing implemented a lottery system this year to limit new license plates to 20,000 a month, or about one-third the number of passenger cars registered in 2010, analysts from J.D. Power and Associates say.
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