There’s much talk on the vast Shanghai motor show floors about the changing face of the Chinese car market. After years of growth in car sales well into double figures, something described with only slight irony as ‘the new normal’ is beginning to emerge - single digit growth.
After the hard recent years in the US and Europe, it is slightly laughable to consider growth marginally below 10% as something of a disappointment, but that is exactly what it is to the manufacturers who have enjoyed a diet of ever-escalating sales for the past five or so years.
It also raises several key issues, none more pressing than how it will affect production if - as predicted - growth continues at this reduced rate. With plans for manufacturing plants signed off many years in advance, many manufacturers risk being committed to plans written during the gold rush years, and exposing themselves to over-capacity. The same story is true of the rush to open dealerships, supply networks and more. As ever, the car industry is a complex business with a fine balance between success and disaster.
Nor is this the only way the market is changing. In the first quarter of 2015 by far the biggest growth segment was in SUV sales. No surprise there, but by far the biggest gains were made by hitherto unloved local manufacturers of cheap, entry-level vehicles, most notably Great Wall. It seems that some local brands with the right vehicles and reputation are starting to gain traction in certain parts of China, most notably outside the biggest cities were there are large numbers of people coming through with the wherewithal to buy their first car.