����������������������������������������������������������������������������������������������������������������������������������������1CHINAAUTOMOTIVEANDCOMPONENTSMARKETChinaAutomotiveandComponentPartsMarkethasbeenwrittenatatimeofsignificantlyenhancedinterestregardingChinaonthepartoftheglobalautoindustry.Chinaisemergingasapricecompetitivecenterofproductionand,moreimportantly,asamajormarketplaceinitsownright.Thedegreeandspeedoftransformationinthissectorhavebeenstaggering.Todaytheautomotivesectorisgrowingandchangingfromdaytoday,andforcompaniesalreadyinvestinginChinaaswellasthosewhoarenotyet“ontheground”inChina,itcanbedifficulttoobtaintheinformationandinsightsthatexecutivesneed.Torespondtosuchneeds,KPMGhasproducedthisreport,toprovideanindependentanalysisoftheautomotiveandcomponentpartsmarkettodayandtoprovideourcommentaryonkeyissuesfacingthesectorgoingforward.Inproducingthisreportwehavedrawnonanumberofpublicsourcesofinformationandspokenwidelytoindustryparticipants(bothlocalandforeign)involvedintheautomotivesectorinChina.Thepicturethatemergesisoneofclearopportunitiesfornimblecompanies,particularlyinthecomponentssectorwhereweexpecttoseeconsolidation.Wehavealsoidentifiedpotentialthreatsthatshouldbecarefullyassessed,includingover-capacity,downwardpricingpressureandpossiblenewgovernmentpolicies.Pleasecontactusifyouwishtodiscussthereportorobtainadditionalcopies;contactinformationcanbefoundattheendofthereport.PaulBroughHeadofFinancialAdvisoryServices,ChinaandHongKongKPMGSeptember2003Preface2�Theinformationinthisreportisofageneralnatureandisnotintendedtoaddressthecircumstancesofanyparticularindividualorentity.Althoughweendeavortoprovideaccurateandtimelyinformation,therecanbenoguaranteethatsuchinformationisaccurateasofthedateitisreceivedorthatitwillcontinuetobeaccurateinthefuture.Nooneshouldactonsuchinformationwithoutappropriateprofessionaladviceafterathoroughexaminationoftheparticularsituation.�KPMGdoesnotacceptresponsibilitytoanypartythatreliesoninformationorviewsexpressedinthisreport;companiesshouldseekprofessionaladviceandconductathoroughassessmentoftheparticularsituationpriortomakinganybusinessdecision.�OurreportisbasedoninformationavailabletousattheendofAugust,2003.OurinformationandanalysisisbasedonresearchandinterviewsconductedinJulyandAugust,2003.3�Marketoverview�Manufacturermarket�Componentsmarket�IssuesfacingforeignparticipantsContents4CHINAAUTOMOTIVEANDCOMPONENTSMARKETDrivenbystrongdemandforsedans,theChinesevehiclemarketisexpectedtotop4millionunitsin2003Industrygrowth�Totalvehiclesales(a)grewfrom1.43millionunitsin1995to3.26millionunitsin2002;acompoundannualgrowthrate(CAGR)of12.5percent;KPMGestimatesthevehiclemarketwillgrowby26percentin2003�Annualsalesareexpectedtoreach7.0millionunitsin2010and8.9millionunitsin2015,aCAGRof7.9percentfrom2002to2015�Sedanssalesgrewby55percentyear-on-yearbetween2001and2002andhavebeenforecasttogrowbyover60percentin2003–salesbetweenJanuaryandJuly2003were0.99millionunits,77percenthigheragainstthesameperiodin2002–sedansalesareontracktoreach1.8millionunitsin2003�Chinaproductiongrewfromrepresenting2.8percentofglobalproductionin1996to4.1percentin2001(1);rankedthe7thlargestmarketforvehiclesalesglobally...
