Automakers are still optimistic about China's potential, but eye-popping annual growth is history.
Consultant Michael Dunne will explain what's next for China at the Automotive News China Conference in Shanghai on April 19-21. The theme of the conference is "How to Prosper in a Buyer's Market."
At the height of the boom, year-to-year vehicle sales rose 65 percent in 2003. Then the Chinese government tightened credit in 2004, and sales stalled. Automakers started cutting prices, which prompted many car shoppers to sit on the sidelines, waiting for prices to drop further.
"When the government comes out and says the economy isn't all right, Chinese people tend to get very conservative," Dunne said last fall.
As president of Automotive Resources Asia Ltd., Dunne has 12 years of experience in Asia. In China, Dunne conducted a survey in 188 markets asking dealers to comment on consumer confidence. In 2002 and 2003, his surveys showed consumer confidence rising. But consumer confidence dropped in 2004.
Automakers continue to expand production capacity. And some analysts expect sales to grow by about 10 percent this year. But automakers are nervously eyeing a crowded marketplace - and a costly price war.