The forecast includes passenger vehicle demand for 31 provinces in China and incorporates the input assumptions from nine market-leading forecast services -- in conjunction with economic and demographic intelligence from IHS. The forecast also includes vehicle demand, segment trends, model/body style demand and brand coverage from foreign import brands, joint venture brands and Chinese domestic brands.

Passenger vehicle volumes in the country as a whole are expected to rise more than 10 million units by 2026. Results of the analysis show that the widely held view of China – namely that eastern coastal areas, approaching saturation, will be offset by growth to the West – is overly simplistic with more complex local dynamics likely to play out.

For example, while Beijing and Shanghai have been thought to have seen new passenger registrations peak (based on government regulations and license plate restrictions), IHS Automotive analysis shows some remaining medium-term sales growth prospects still remain there.

The complexity of market drivers in the Chinese market can been seen in recent data out of Guangdong province, one of the largest and more mature provinces, which is seeing car sales growth rivaling the strongest car markets in the world and growing at more than twice the China national average -- and faster than the majority of Central and Western provinces.

The real market opportunities for automakers come from other parts of China as many provinces will experience a substantial shift in affordability, personal mobility needs, and vehicle development and production capacity improvements between now and 2026.

As an example, Shangdong, in eastern China, is currently the ninth-largest market for passenger vehicles globally, now larger than Italy or South Korea, with additional growth expected. Also in the east, Fujian province was the 66th-largest passenger vehicle market globally in 2002, but ranks 36th today, larger than Norway, Peru and Israel combined. And Qinghai province, which ranked as the 116th-largest market in 2002, is ranked 80th today, larger than the automotive markets in Romania or Vietnam.

IHS Automotive also has identified some provinces that will achieve a significant slowdown in sales by the middle of the next decade. Shangdong, for example, was averaging double-digit growth in passenger sales for many years; however, this rate is expected to fall dramatically and average below 5 percent growth by 2026.

Source: IHS Automotive