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China Auto Sales Growth Lags U.S. For First Time in 14 Years

many Indians dont know how things work in China,Shanghai has restrictive rule for buying cars for decades,but Shanghai's car market is just a fraction of Beijing's,Beijing is always the most important car market in China,Beijing alone accounts for 10% of total China's car sale.and Beijing has very strict laws which make out of town cars almost impossible drive in Beijing.and the city is the barometer of China's car sale.

this restrictive law came out last year and the impact is so obvious,nothing like that happened before.
 
Anyway China's auto production is still 2 times the size of US.

May be true. But if you look at the manufacturers, none of the Chinese car companies figure in the top 10 manufacturers. Changan Automobile Group of China is no 18 and Tata of India is no 19.
 
10 years ago,Chinese car industry was not worth mentioning in the world,now the world's biggest.and Chinese home automobile industry is budding and expands like crazy,in another 10 years it will dominate the world.
 
guyz, i was thinking that china indeed can do anything. infact right word is, execute anything. if they want growth they do it. if they want slowdown, they do it. well lets not get into the effect on comman man's right to freedom,accountability, etc. lets keep it aside. if economic growth is the parameter, then china indeed is a miracle.
 
guyz, i was thinking that china indeed can do anything. infact right word is, execute anything. if they want growth they do it. if they want slowdown, they do it. well lets not get into the effect on comman man's right to freedom,accountability, etc. lets keep it aside. if economic growth is the parameter, then china indeed is a miracle.

the accountability of Chinese officials is much more than India. Let's just do a simple question:

how many babus get sacked per train accident in India? In China?
 
May be true. But if you look at the manufacturers, none of the Chinese car companies figure in the top 10 manufacturers. Changan Automobile Group of China is no 18 and Tata of India is no 19.

There are 4 Chinese auto manufacturers rank in Fortune 500(rank 145\151\197\227) . And all of them have much more revenue than Tata motor(rank 359)
 
Growth rates are declining around the world. In October 2011, China's auto sales grow 0.8% to 1.605 million, , while auto sales in India drop 16.9% to 221,636.
 
So I don't know why Mr. Roybot laugh at China while India is worse than China, at least auto sales in China is nearly eight times the size of India,and it still growing.
 
There are 4 Chinese auto manufacturers rank in Fortune 500(rank 145\151\197\227) . And all of them have much more revenue than Tata motor(rank 359)

Tata and reliance is a joke compare to chinese companies.

Billionaire Anil Ambani Taps Chinese Loans After Stock Plunge

Indian billionaire Anil Ambani is tapping Chinese lenders for a second time in less than a year after a decline in the value of his flagship company left him with almost $1 billion of convertible bonds to repay by March.

Ambani’s Reliance Communications Ltd. (RCOM) yesterday said it will borrow $1.18 billion from lenders including China Development Bank Corp (SDBZ)., Export-Import Bank of China and Industrial & Commercial Bank of China. (601398) The proceeds will help India’s second-largest mobile-phone operator redeem convertible debt maturing on March 1. The shares are trading 87 percent below the price at which the notes can be switched to equity.

The Chinese loans will help Reliance Communications cap its interest expense for the borrowing at 5 percent even after dollar funding costs for Indian companies rose 171 basis points in 2011 to 6.83 percent, according to HSBC Holdings Plc. The credit helps China expand its role in the world’s second-fastest growing major economy that’s also competing with the north Asian nation for resources, said Erica Downs, a fellow at The Brookings Institution.

“Without the Chinese, they would have been in big trouble,” said Juergen Maier, a Vienna-based fund manager at Raiffeisen Capital Management that oversees about $1.1 billion of emerging-market assets. “The Chinese are the last lenders left that will lend them large amounts of money at reasonable interest rates.”

Reliance Communications shares gained 2.8 percent to 88.85 rupees in Mumbai yesterday, compared with a conversion price of 661 rupees for the debt. The shares declined 52 percent in dollar terms last year making it the worst-performing stock in the 28-member MSCI AC Asia Pacific, excluding-Japan, Telecommunication Services Index.

‘Buying Interest’

The yield on the Mumbai-based company’s notes issued in 2007 dropped 19 percentage points to 11.78 percent yesterday, the lowest level since June 9, according to prices provided by Barclays Plc. Indian companies have a record $5.3 billion of convertible notes maturing this year, according to data compiled by Bloomberg.

“If Reliance Communications had defaulted, the whole Indian convertible market would have collapsed,” Raj Kothari, a convertible trader at Sun Global Investments Ltd. in London, said in a telephone interview. “Sentiment has improved in Indian convertibles and we are seeing buying interest from investors.”

The loan to Reliance Communications will have an “extended” seven-year maturity with an interest cost of 5 percent, according to yesterday’s statement.

Rating Cut

The company, which had its credit rating cut one notch to the third-highest level by ICRA Ltd., the local unit of Moody’s Investors Service in June, has $4.8 billion of debt due by 2021, Bloomberg data show.

Reliance Communications’ earnings before tax would have slumped 50 percent in the year ending March had the mobile- phone operator refinanced its debt at the 12 percent rate that AAA-rated corporates have to pay on rupee-denominated loans, Edelweiss Securities Ltd. wrote in a note to clients on Nov. 22

Ambani sought help from Chinese lenders last year as well. Reliance Communications on March 9 said it will borrow 87 billion rupees ($1.7 billion) from a group led by China Development Bank to refinance the purchase of third-generation airwaves and buy equipment.

Chinese Goals

Ambani’s Reliance Power Ltd. on Sept. 30 got approval from India’s central bank to borrow $1.1 billion from Chinese lenders to build a 3,960-megawatt power project. Ambani’s companies have agreed to borrow as much as $15 billion from lenders in the north Asian nation.

Reliance Communications used most of the loans to repay costly debt, according to a Dec. 15, 2010, statement. The remaining is being used to buy Chinese-made equipment, including $600 million for telecommunications gear from Huwaei Technologies Co. and ZTE Corp., the company said.

Ambani signed an agreement in October 2010 to borrow as much as $12 billion from Chinese banks to buy power equipment from Shanghai Electric Group for Reliance Power even as India’s power ministry endorsed a plan last month to triple import duty to help local manufacturers compete with Chinese rivals.

“Chinese banks try and balance two goals to expand their loan portfolio and if that can happen while supporting Chinese diplomacy, then it’s even better,” Downs, a fellow at the John L. Thornton China Center at the Washington, D.C.-based Brookings Institution, said on Jan. 11. “CDB, as a state bank, think of themselves as a sort of development finance corporation, and borrowers see them as a lender of last resort.”

Billionaire Anil Ambani Taps Chinese Loans After Stock Plunge - Bloomberg
 
May be true. But if you look at the manufacturers, none of the Chinese car companies figure in the top 10 manufacturers. Changan Automobile Group of China is no 18 and Tata of India is no 19.

India auto is nothing take a look at this

Auto sector: China's success but India's challenges

Some of the best minds of the auto industry got together to discuss if China has tasted sweet fruit of success while India is only struggling in the sector.

In the special discussion on behalf of Audi and CNBC-TV18, Marco Hecker, Partner and Director Automotive and Industrial Equipment at Accenture, Sumit Bali,CEO of Kotak Mahindra Prime and Michael Perschke, Head of Audi India were part of the panel.

Here is an edited transcript of the interview. Also watch the accompanying videos.

Q: The title of my discussion suggests that China has had success and India has had only challenges. What are India's successes?

Hecker: I think there are a lot of India's successes and the key part is if you look at India and China, it's somewhat an unfair comparison. If you look at their different markets there is a lot of potential on either side.

If you look at number of cars per 1,000 inhabitants, India has much more headroom than China has. Obviously there are some challenges but the key strength of India is not only the huge demand which we have in the market as such, but also the entire legal system that's something that China cannot give us. I think it's really important that we as Indians need to make sure that we cannot out-Chinese the Chinese but I think it's really important that we believe in our own strength and work on our own destiny.

Q: I just want a little perspective from you. How many cars did you sell last year in China and how many did you sell in India?

Perschke: Well, in China last year we sold more than 300,000 cars and it's the first time in our history that we sold more cars in China than in Germany. So, we always say China is our second home market, basically it's now our first home market and in comparison India we sold 5,511 cars.

Taking that into perspective it is pretty much what we sold in China in 1996-1997, so from that point of view probably you could calculate we are probably 13-14 years behind China, but that's of course not that simple.

But we see that China is a big car market. Chinese started buying cars, government official cars where we started with Audi 100 a long time ago, while India is predominantly a small car market. There is a more demographic evolvement of the market and I think that makes some significant differences between the two markets just for instance the luxury play out.

Q: How is the customer any different in the two countries?

Bali: There is a lot of difference between a Chinese customer and the Indian customer. The finance penetration that is the number of cars sold on financing is far higher in India.

It's almost four to five times the Chinese number. About 70% of cars in India are sold on finance whereas the similar number for China is about 12-15%.

Q: Then is how is the Chinese consumer buying a car? Are they not taking bank loans to buy cars?

Bali: They are buying with outright cash. It is largest market for buying vehicles on down payment. So India is certainly following a different trajectory here. I think the reasons are by and large the younger generation is far more open to taking loans.

There is a good legal infrastructure. There is adherence to contract laws. The credit bureaus are doing a wonderful job, so that makes the finance penetration even better. I am quite hopeful that seeing the trends of younger generation the 70% will only head higher in future.

Q: By all definitions of poverty and economic wealth, India continues to remain a poor country and a middle class country. Is the Indian consumer ready to buy luxury vehicles to flaunt his or her wealth so to speak? Do you see a cultural difference between a Chinese customer and an Indian customer?

Hecker: Luckily so, because if you look at the overall global automotive market India and China in particular when it comes to the luxury segment are the most crucial prime drivers of growth and in India as well as in China it's a status symbol to drive a car.

It's basically I have arrived, I have achieved. So it's a good thing to show off. I think there are many nicer ways of showing off in a really beautiful car. Also looking at the amount of time that you spend in the car, it's not only about showing off it's also about enjoying the luxury around you. If you spend a lot of time it makes a true difference.

Q: 2011 has been a year of interest rate hikes. How sensitive is the Indian consumer to these interest rate hikes? The hikes in interest rates are not dramatic shifts in EMI, they are marginal shifts, but in terms of sentiment they represent dramatic shifts in sentiment. How sensitive is the Indian consumer to these interest rates problems?

Bali: I would say there is a high correlation between interest rate and automotive sales, inverse correlation, but logically if you were to see I don't think it holds true. It's just that when the interest rates are higher, that period of high inflation, high fuel prices, generally poor sentiment, so people are not so confident about future.

Q: So, there interest rate hike is like a red flag to the consumer saying maybe everything is not going to be as good as you think it is?

Bali: Absolutely, but in terms of affordability given the kind of wage inflation we have had, I think one can easily afford the interest rate hike. In fact we did another study and given the discounts which were non-existent in 2010 and you had lower interest rates with the discounts of 2011. While the higher interest rates, commercially one was better off buying a car in 2011, but it's just that the sentiment wasn't too great hence you had this near zero growth in the automotive industry.
 

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