Demand in 2006, especially in the first half of the year, was very strong. The market grew more than 50 per cent month-over-month. Jetta, Excelle and Xiali remain the top three models. All segments grew in 2006 and the C-segment accelerated again this year.

A model poses besides a Maserati car on Saturday. Maserati is one of Italy' s leading luxury car brands. [chinadaily.com.cn]

Although a weak first half in 2005 can be attributed as a reason for 2006's crazy half-year boom, there are other factors behind the quick growth.

It is believed that two fundamental reasons are more convincing than the other factors: one is rising income and the other is quickly decreasing car prices in the past two years. These two factors quickly enlarged the customer base, especially in the second-tier cities in some large provinces, such as Shandong, Hebei and Liaoning.

The car market did not grow quickly in the A-segment, which further proved that Chinese do not like mini cars, even after the discriminative traffic control policies were lifted earlier this year.

Volkswagen has two joint ventures in China with the nation's two largest automotive producers First Automotive Works Corp and Shanghai Automotive Industry Corp.

In the first three quarters of this year, Volkswagen's sales in China grew by 28.7 per cent to 524,558 units.

China's car market is poised for rapid growth over the next few years, boosted by enormous consumer demand and a growing replacement and second-hand car segment, according to recent surveys conducted by US market research firm ACNielsen.

An ACNielsen telephone survey of 1,500 respondents in Beijing, Shanghai and Guangzhou conducted in May and June revealed an increase in car ownership and purchase intentions.

The survey found that 28 per cent of Beijingers own a car, followed by 18 per cent of people in Guangzhou and 11 percent of people in Shanghai.

This represents major growth since 2004, when car ownership in these three key cities stood at 11, 5 and 4 per cent.

According to the survey, 13 per cent of respondents claimed they planned to buy a car within the next 12 months, which is nearly twice the amount of 2004.

Another ACNielsen Internet survey, which polled 1,800 Chinese netizens in July and August, showed that more than 10 per cent of car owners had purchased a second-hand vehicle, and nearly a quarter of prospective buyers were planning to buy a second-hand car.

Despite the immense market potential, big challenges lie on the horizon for automakers in China.

1

2

(For more biz stories, please visit Industry Updates)