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China’s auto demand to come from small towns and rural areas in the next 10 years

TIANJIN – In the next 10 years, China’s auto demand will mainly come from tier-2 and -3 cities and rural areas, said Xu Changming, director of the Information Resources Department at the State Information Center (SIC), basing his findings on recent SIC research.

According to Xu, the year-on-year growth rate of automobile sales in 2009 in tier-1 cities, including Beijing and Shanghai, reached 46.6 percent, while tier-2 and -3 cities saw growth as high as 56.5 and 67.7 percent respectively.

Among total auto sales, tier-1 cities represented 35.7, 32.8 and 30.8 percent of the market shares from 2007 to 2009 respectively, while tier-2 and -3 cities and small towns combined had market shares of 64.3, 67.2 and 69.2 percent over the same period. “The market shares of small cities are continuously growing,” said Xu.

Xu explained that the vehicle ownership per 1,000 people in tier-1 cities reached over 110 units in 2008 while in tier-2 and -3 cities the rates were 48 and 37 units respectively. Ownership rates in tier-4 and smaller cities and townships were below 25 units in 2008. “The low vehicle ownership rate in small cities and towns offers huge room for growth,” said Xu, adding that “small cities and towns will become the main driving forces for China’s auto sales growth in the next 10 years.”

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