Boom time for China car mart

The automotive industry is booming in China, having bounced back with a bang following a blip in 2009.

Carmakers worth their salt cannot afford to miss revving up their presence or making inroads in the world's biggest and fastest growing car market.

This year, new car sales in the world's most populous nation should hit 18 million units, markedly higher from the some 14 million automotives sold in the year before.

To grasp how big the market in China is, trying chewing on this statistics. Luxury car sales in China last year, were a tad higher than Malaysia's entire industry sales volume in the same period.

The Chinese luxury car segment alone stood at 668,000 units in 2010, higher than Malaysia's total industry sales of 605,156 units during the year.

The luxury car segment accounted for 5 per cent of China's total sales volume and is expected to expand by 20-30 per cent every year and make up about 8 per cent of China's overall sedan market this year.

Chengdu - one of the top five cities in China and known for its giant pandas and spicy food, is also home to the largest BMW 4S centre in Asia operated by Sime Darby Bhd - made up 2.9 per cent of the 668,000 luxury vehicles.

Overall, car sales in Chengdu have been skyrocketing. More and more people are buying cars as the Chinese get richer and more affluent.

The capital city of the Sichuan province has a population of some 11 million people. It had a gross domestic product (GDP) of over 400 billion renminbi last year, or equivalent to about RM200 billion, and is economically growing at double-digit pace.

On the home front, Malaysia's automotive sector is nowhere near its Chinese peer, at least when it comes to growth.

It does not make a good reading that after a strong start in the first four months, sales in Malaysia has been heading south.

Many of us know that sales were bogged down first by the parts supply disruption from Japan due to the tsunami and earthquake, and later, the amended Hire Purchase Act.

For the first time in a long period, monthly sales in May had shrunk. The number for June may be much lower and July is not expected to be any better.

The decline brought about by the changes in the Act particularly, will continue for long unless the authorities start doing something about it.

The Amended Act is currently a new headache to many industry stakeholders.

It's true that car buyers are now better shielded from unscrupulous dealers.

But at the same time, dealers and distributors' concern about possible trickling cashflow, a rise in booking cancellations and longer lead-time for completion of sales resulting from the changes are valid.

The Malaysian Automotive Association president Datuk Aishah Ahmad recently said there were "teething" problems in the vehicle retail trade because of the Amended Act, while Sime Darby Motor managing director Datuk Lawrence Lee felt that the Amended Act should be "tweaked" to address the teething problems.

The Domestic Trade, Cooperatives and Consumerism Ministry and the MAA separately said that they would meet each other to find solutions.

We haven't heard whether an initial meeting has been arranged. If not, it's better to do it fast before things get worse.