If you think things are great for automakers in the US market, you’d be right. Analysts expect 17 million new cars and trucks to be sold here in 2015.
But as good as that sounds, China sounds even better.
Sterne Agee auto analysts Michael Ward offered this insight in a research note published Wednesday:
The market in China has expanded from about 5.8 million units in 2005 and has grown to be the largest market in the world. We expect the pace of growth to slow in 2015 and in 2016 but look for the market to approach 26 million units in 2016. In addition, the trend in the market towards crossover and sport utility vehicles, in our view, favours the U.S.-based vehicle manufacturers and suppliers. China should remain the largest market globally for many years and a significant profit contributor for the U.S.-based vehicle manufacturers and suppliers.
China’s auto market is great for General Motors and has been for some time. Ford, after lagging competitors in China, has caught up fast. And of course both GM and Ford really know what they’re doing when it comes to SUVs and crossovers. As in the US, and as Ward pointed out, these vehicle categories are a sweet spot for the Chinese market.