There have been several articles published recently that highlight
the rapid growth of the automotive
market in China. Obviously, this
market is already very developed in the U.S.
and there are many Internet companies that help consumers to make informed
automotive purchase decisons, from Edmunds.com, to Vehix.com, to AutobyTel (and several more).
A recent Wall Street Journal article points out:
"Auto sales in China jumped by
more than 70% in January, according to an industry trade group, putting the
country on track to widen its lead over Japan as the world's second-largest
vehicle market this year."
In that same article, the Journal quotes Michael Dunne,
president of Automotive Resources Asia (a consultancy) as saying "There's
no reason to think this current momentum will slow, this could go on for a
while." He goes on to forecast a 15% growth in passenger-car
sales this year which would lift total
vehicle sales to about 6.2 million in 2006.
In this week’s BusinessWeek,
the article “A Billion Tough Sells”
chronicles the growth of auto sales (both new and used) in China,
and how consumers are very information hungry. Key takeaways from the article include:
- About half of all Chinese buyers rely on the opinions of family and friends when
making this critical purchase.
- The
car buying audience skews towards a younger, more valuable demographic: the median age of car buyers is 35, vs. 50 in the U.S.
- The used car market is growing rapidly as well (more than 1.25 million used
cars were sold last year)
The
fact that users are information hungry, and that there are more and more models
hitting the market all of the time gives a clear indication that there is a
growing need for unbiased product/pricing information to inform the buying
process.
Finally, an article from TheDeal.com
titled “China Unbound”
highlights the success of ChinaCars.com, an early, home-grown entrant into the
automotive information-portal business in China (which received
funding last
year from Granite Global Ventures). The article states:
“With venture
capital banking, he's built ChinaCars.com into a company with $13 million in
revenues and $2 million in profits.” “We
are building up the largest community of auto consumers in China”
states the CEO and founder John Zhang
So obviously the Chinese entrepreneurs are not waiting for successful U.S. companies to come in and establish themselves, and are figuring things out and rapidly building significant market share.
Granite’s partner Thomas Ng sums
things up well in terms of the automotive opportunity in China
when he states:
“We invested in ChinaCars.com
because of the maturity of its business models, especially since applicable
business models in the U.S.
exist, such as AAA, eBay Motors, Autobytel [Inc.] and Edmunds.com [Inc.]. These proven business models will take root
in China as a
global auto supply chain and business practices migrate to China
over the coming decade."
