Chinese Automotive Industry To Benefit From Government Intervention

The Economic Research and Analytics Group at Frost & Sullivan says the Chinese government's new Auto Industry Development Policy will benefit manufacturers.

Vehicle manufacturers, component manufacturers, distributors, industrial automation suppliers, and automotive logistics service providers will be impacted by the key industry variables and the emerging growth opportunities in the region for the various stakeholders involved in the automotive industry and allied industries.

The Chinese government formulated the Auto Industry Development Policy to adapt to the new situation prevailing in the domestic and international auto industry. The government structures the auto industry to develop strong brands that will be internationally competitive and fulfill domestic needs. Additionally, the government's emphasis on research and development for fuel efficiency and use of recyclable materials will have a significant impact on the automotive industry.

Presently, China is the second largest automotive market in the world. China currently ranks third in annual output of light vehicles and the Brazil, Russia, India and China are expected to account for almost half of the world's light vehicle output growth in the next 5 years.

"China aims to become a major auto manufacturing country by 2010 with the strength of locally manufactured products that will meet domestic demand and will foray into the international market," says Frost & Sullivan Research Analyst Lavanya P Arun. "The Chinese government's scientific development plan encourages vehicle manufacturers to develop environmentally friendly technology by providing them access to low interest loans and subsidies. The goal is to promote innovation and make technological advancements that enable domestic car makers to manufacture products with their own Intellectual Property Rights while practicing branding strategies."

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