Sector Review: China's Vast Potential Has Local And Foreign Automakers Gunning Their Engines Sep 07
Standard & Poors, September 2007
Abstract
Multinational car executives' eyes must light up when they look at China's auto market. Only 20 in 1,000 people of driving age owned a car in 2006, compared with 900 car owners for every 1,000 inhabitants in the U.S. (see chart 1). In a country with 1.3 billion people that's a lot of potential new drivers. Purchasing power is rising, too, with nominal national income likely to grow at more than 10% annually over the next five years, spurred by strong economic growth. The result: booming car sales. But along with promising high returns, the Chinese market presents high credit risks for established automakers--not least because of intense competition, quality issues, and uncertain intellectual property protection. In addition, while China...
Companies mentioned in this report are: Motors Liquidation Co. (fka General Motors Corp.),China (People's Republic of ),Volkswagen AG
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Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
Motors Liquidation Co. (fka General Motors Corp.),China (People's Republic of ),Volkswagen AG
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