DETROIT -- Vehicle sales in China -- already the world's largest market -- will soar to 40 million units a year over the next decade, a senior Chinese auto executive predicted.
Speaking as part of a panel on China at the Automotive News World Congress, Wang Dazong, president of Beijing Automotive Industry Holding Co., said last week that sales of cars, trucks and buses in 2020 are likely to more than double from 18.3 million units last year.
That would require annual sales growth of 11 percent, Wang noted, or less than half the 24 percent annual growth rate of the past decade. "I really believe 40 million units is realistic in 10 years," he said.
BAIC expects to ride the wave, doubling its annual sales to 3 million units by 2015. "We want to be a global company," Wang said.
If the projection comes true, nearly half of global vehicle production would be concentrated in China, Wang said. But he does not expect China to emulate Japan and transform itself into a major vehicle exporter.
"You will see Chinese products on a global stage, but [China] won't be like Japan. China will account for 50 percent of the world's sales volume," so automakers will produce most of their vehicles in China for the domestic market, Wang said.
So far, prosperous Chinese coastal cities such as Shanghai and Guangzhou have spurred auto sales. Now, China's less prosperous inland cities are spawning a growing middle class.
Freeman Shen, senior vice president of Volvo Car Corp., said, "The inland cities are growing more affluent." By 2020, China will boast 1,900 cities with income levels similar to Shanghai's today.
Price-sensitive customers in inland markets have preferred low-priced cars sold by domestic Chinese automakers such as Geely Automobile Holdings Ltd. and Chery Automobile Co. But as incomes rise, demand for premium cars will increase accordingly, Shen said.
Now, international automakers are targeting these markets. Last year, SAIC-GM-Wuling Automobile Co. -- a three-way joint venture formed by General Motors Co., Shanghai Automotive Industry Corp. and Liuzhou Wuling Automotive Co. -- introduced its Baojun brand, which will feature low-priced cars targeted at China's inland markets.
Terry Johnsson, vice president of GM's China operations, told Bloomberg News in November that GM expected 60 percent of its China sales growth in these inland regions in five years.
Shen said Volvo plans to sell 200,000 units in China annually by 2015, a huge jump from 30,500 in 2010. To do so, Volvo may take over an assembly plant in the southwest China city of Chengdu, which is owned by its new corporate parent, Zhejiang Geely Holding Group Co.
Automakers will have to be agile marketers to exploit China's growing prosperity, he said. "Most companies think China is one market," Shen said. "That's wrong. China is more like Europe."