China automobile market boomed in 2009 since government announced a series of stimulus policies, such as automobile acquisition tax reduction, subsidy program for rural areas, and auto replacement. In 2009, China automobile output and sale reached 13.7910 million sets and 13.6448 million sets respectively, up 48% and 46% over the prior year.

During the first quarter of 2010 China produced 4.5545 million sets and sold 4.6106 million sets, up 76.99% and 71.78% year on year. However, there occur signs of scaling back in the second quarter.

On the 6^th steel Industry Development Strategy and Supply/ Demand Forum hosted by Steelhome on 23^rd-25^th April, Mr. Lv Wenpeng, from China Association of Automobile Manufacturers (CAAM), discussed the auto industry development trend and automobile steel demand for 2010.

China automobile market would maintain 16 percent growth in 2010

China automobile industry would maintain 16 percent growth rate in 2010, with production exceeding 15 million sets as the foundation for the fast growth remain unmoved.

First, stable macro economy will be helpful for a growing automobile markets. Expanding home demand is the fundamental way toward consistent growth and automobile consumption is a major force pushing up home demand.

In China , as industrialization and urbanization is still on the course, increasing people would rush to the city, which may light up private consumption of automobiles.  

Second, policies encourage consumption. Subsidy program for rural areas and automobile replacement policies are still valid; tax on vehicle purchase is adjusted to only 25% discount.  In early 2010, Ministry of Finance and Ministry of Commerce uplifted the threshold in replacement program, and allowed buyers to enjoy tax reduction and replacement subsidy at the same time.  

Third, medium and small cities in China grow fast, with expanding market potentials. They may substitute for large cities to become major force in automobile consumption.  

Fourth, calls for energy-saving and environment-friendliness will promote new energy automobile sales. Government expand demonstration cities for new energy automobile from 13 to 20, and chose 5 cities to offer subsidies to private purchase of new energy cars.  

Fifth, auto consumption loans will drive up consumption.

Outlook on China Automobile Industry for 2010

Lv Wenpeng, China Automobile Association

Automobile steel demand will amount to 38 million tonnes in 2010

Automobile steel are composed of flats and quality steel (special steel), with sheet accounting for 42 percent and quality steel 30 percent. Steel products occupy 72-88 percent of all the raw material needed in a car manufacturing.  One passenger car uses about 0.84 tonnes; commercial vehicle uses about 5.17 tonnes. For 2010, steel consumed by automobile manufacturing is estimated to be about 38 million tonnes, composing 22 million tonnes of flats. Steel products consumed in finished automobile manufacturing are 29 million tonnes; that for spares about 9 millions tonnes.