The China Automotive Industry Climate Index recorded 103.2 points in Q4 of 2010 (2001=100), down 1.6 point over the pervious quarter. Continuing Q3's slight decline, the index returns to be normal gradually.
2. The Pre-warning Index of China Automotive Industry records 120.0 points
The Pre-warning Index is an important indicator reflecting the climate of the auto industry. In Q4 of 2010, the index registered 120.0 points, down 6.7 points from the previous wave, continuing the decreasing trend of the previous quarter and moving close the "Green Zone."
3. The Entrepreneur Expectation Index of China Automotive Industry registers 108.0 points
The Auto Industry Entrepreneur Expectation Index reflects automakers' perception of the current market situation as well as their future anticipations. In Q4 of 2010, the index registered 108.0 points, down 13.1 points from the previous quarter, indicating that entrepreneurs are relatively satisfied with the market performance of Q4 but the satisfaction is far lower than in Q3.
4. The Dealer Manager Index of the China Automotive Industry registers 105.0 points
The Dealer Manager Index demonstrates dealers' perception of the current market situation as well as their future anticipations. In Q4 of 2010, the index dropped to 105.0, down 10.8 points compared with the previous quarter, which indicates that dealer managers are slightly less confident about the market performance than before.
Characteristics of China's Automotive Industry in Q4 of 2010
In 2010, China's auto industry maintained a sound development trend. However, since the base of the previous year was low in Q1 and high in Q4, the growth rate of 2010 Q4 slowed down and a variety of major economic indicators record declines to different extents. Overall, China's auto industry has stepped into a normal, stable and sustained development period.
In summary, the following trends were observed during the survey: 1. The Industry Climate Index of Q4 continued to decline and returns to normal gradually; 2. The majority of the indicators concerning auto production and operation have entered the "Green Zone;" 3. The business scale expansion and product structure optimization promote the soaring growth of the auto industry in 2010; 4. Entrepreneurs and dealers are very satisfied with the market situations in Q4, but they are far less confident about the market performance in Q1 of 2011 compared with the previous quarters.
Forecast of the China Automotive Industry Climate Index in Q1 of 2011
In 2011, despite of the unfavorable factors such as cancellation of preferential policies, inflationary pressure, purchase restrictions in a few major cities, etc. the future prospect of the auto industry will still embrace a promising future and the production and sales volumes will keep increasing stably. This is mainly because the auto consumption in China is just on the threshold; cities are undergoing an early phase of auto popularity; the market in the countryside is just emerging and is far from saturation; and there is still large room for auto development in small and medium cities as well as rural areas.
In general, due to the relatively high record in Q1 of 2010 and policy changes that advance the purchase action of some car buyers, it is estimated that the auto production and sales volumes in Q1 of 2011 will experience a significant decline. According to the forecast, the auto sales volume in China will still maintain a growth rate of around 15% in 2011, exceeding 20 million units.
According to the results of the research on entrepreneurs and dealer managers, both the Entrepreneur Expectation Index and the Dealer Manager Index record declines to different extents. Each of the two indices consists of two parts - satisfaction index (entrepreneurs'/dealer managers' satisfaction with the current period) and expectation index (entrepreneurs'/dealer managers' expectations of the future). From the index composition of Q4, we see that the satisfaction index is far higher than the expectation index. On the one hand, under the influences of the small surge of year-end purchases and the end of the preferential policies, the market goes well and entrepreneurs and dealer managers are quite satisfied with the market performance of the last quarter of 2010; and on the other hand, the soaring market at the end of 2010, in a good measure, overdrafts the 2011 auto market. Under the multiple influences such as the coming spring festivals, withdrawal of encouraging policies and the obscure effects of the new traffic control policies in Beijing, entrepreneurs and dealers are less confident about the auto market performance in 2011.
The Entrepreneur Expectation Index shows that most entrepreneurs lack confidence in the auto market performance in Q1 of 2011. As regards entrepreneurs' perception of car sales, 80% of them believe the sales volume is going to drop, among which 20.0% hold that car sales will face a "remarkable drop" and 60% believe that there will be a "slight decrease". Besides, entrepreneurs also make a projection for 2011 Q1 auto production: there are 83.3% entrepreneurs indicating a potential "decline". One entrepreneur stated that "the auto market to some extent will confront the impact from the advanced sales in 2010 and numerous uncertainties in government policies in the automotive industry."
According to the Dealer Manager Confidence Index, they believe that business operation in Q1 of 2011 will wither. 74.0% of the dealers think the transaction volume in 2011 Q1 will fall, which also drags down their main business income by 74.8%, among which 34.7% hold there will be a "sharp decrease" in this respect.