When speaking of the scales of new car markets worldwide, everybody knows that the top countries are China, USA, Japan, India, and Germany, etc., in order. If we view from “Motor vehicles per 1,000 people”, then there are 8 countries (only major countries will be taken into consideration) surpass 500 motor vehicles per 1,000 people, which are USA, Australia, Italy, Canada, Japan, Germany, UK, France, in order; The 1st – USA have 864 motor vehicles, which means everyone have more than one car excluding the elders and children who are unable to drive. As for the biggest market – China, it’s just 220 motor vehicles currently, which means there are still a big room for the growth of car market in the future. Now, let me compare the purchasing power of cars between the two greats – USA and China by the GNI per capita and the average car prices…
- According to the GNI per capita of 2021, it’s US$ 70,430 in USA, and $ 11,890 in China.
- The average price of cars in USA is about NT$ 1,500,000, and it’s NT$ 740,000 in China. Certainly, there are differences between car models selling in various markets, and the same car will be tagged with different prices, so that the so-called “average car prices” had already reflects part of the purchasing power.
- When the two numbers mentioned above are divided by each other, the annual income of American can buy 1.48 car, and Chinese can buy 0.5 car. The purchasing power of cars is about 3 times difference.
If we reckon the Motor vehicles per 1,000 people of China with the two figures - 864 Motor vehicles per 1,000 people and the purchasing power in USA, then it will be 290 motor vehicles; that is to say, even though the GNI per capita of China didn’t increase, the current 220 motor vehicles is at least 30% less than the theoretical value – 290 motor vehicles, and it will be an astonishing figure of 95 million motor vehicles (the current car parc in China is 315 million units) when converting into the car parc! What’s the reason behind that makes the car parc in China way under expectation? I have a few observations…
- The total length of US public roads is 6.9 million kilometers, and it’s 5.2 million kilometers in China; The total length of US railway is 250,000 kilometers, where 80% of it is for cargo transportation, and there’s less than 1,000 kilometers are high-speed rail. On the contrary, there are 100,000 kilometers in China, where 10,000 kilometers of it are high-speed rail. Thus, it can be seen that the infrastructure of transportation in USA is more appropriate for the development of car market, and Chinese have the option of high-speed rail in mid-distance or long-distance travel. In other words, the public road infrastructure of China somehow limited the growth of car market.
- The automotive industry of USA was already very prosperous before the World War II that private cars are everywhere. However, in China, the mass public didn’t own private cars until the economic reform in the 1980s, and the sales volume of new cars began fast growth after the beginning of the 21st century. The culture and history between these two countries has little in common, so that the “Motor vehicles per 1,000 people” of China won’t be easy to catch up with the USA within the past 20 years.
- According to the survey of IHS Markit, the average lifetime of the American cars (including used cars) is 12 years, but it’s 4 years in China. This situation might be caused by the design quality and assembly quality, road surface quality, traffic condition (congestions are common in China), the frequency of facelift (to attract consumers to replace their cars quite often), and unattractive residue value and appeal of used cars, etc., Certainly, we can understand the fundamental reason why the car parc in China is insufficient from this point.
- There are policies that ban used cars to move across provinces in China, which limited the circulation of used cars. Some provinces began cancelling these policies recently, which might have some positive effects of increasing the car parc.
Take the two greats – USA and China as an extreme contrast to analyze from the aspect of “Motor vehicles per 1,000 people”, we can filter out the history factors of car market evolvement and predictions to the future. Certainly, when the era of BEVs comes, the problem of powertrain malfunctions will no longer exist, the lifetime of batteries will be getting longer with the improvement of technology, and the design quality of exterior/interior of cars are more durable, therefore countries with large population including China, India, etc., will be the leading car markets for the growth in the future, and the global car parc will also keep increasing.