China confirms the end of the support measures for foreign auto manufacturers

Despite the end of support measures for foreign investment, non-Chinese automakers continue to invest.

China confirmed Monday the end of measures to support investment by foreign automakers. “This is a government order which has the force of law,” said an official of National Development and Reform Commission (NDRC), China’s planning agency. This measure is clearly aimed at increasing the share of local brands, which still hold one-third of domestic market. China was willing to reduce customs duties for imports of components and equipment in the car.

Beijing clearly wants to support national manufacturers (Geely, Chery, BYD …), who occupy only a third of the local market for the moment. Purely Chinese manufacturers remain focused on products which are often copies of Western or Japanese models.

Vehicle sales in the No.1 market of the world increased by 2.5% last year, after jumping 32% in 2010 and 46% in 2009. 18.51 million units were sold in total (including commercial vehicles). Sales of passenger cars only, however, continued to increase from 5.2% to 14.5 million. For 2012, the Chinese market expected to rebound and grow by 8% to 20 million units, according to CAAM (China Association of Automoblie Manufacturers).

These measures do not deter foreign manufacturers. Volkswagen, No.1 automaker in China according to statistics, announced in early January to build a new plant in Ningbo. Carlos Ghosn, CEO of Renault-Nissan Alliance, has also said recently that the French car company to expand in China between 2014 and 2016.