Will Air Pollution Concerns Kill China's Auto Market?

In early 2014 the global auto industry was looking at the 2013 car sales levels in China and they were clearly blown away, more cars were sold that year than in any other year in human history. All total with China included it was over 40 million cars, imagine that? Of course, imagine all the roads and fuel needed in the future to support that. More impressive perhaps are the predictions for 2014. Let's talk.

Now then, there was an interesting article in Bloomberg Business Week - China Section - titled; " China Vehicle Sales Seen Slowing on Pollution Controls," published on January 9, 2014 which stated what many in the auto industry, especially GM (General Motors) fear;

"China's main car association forecast that the world's biggest automobile market will see slower growth this year as anti-pollution and austerity campaigns spread." And the article noted that Chinese car sales were robust;

1. China car sales 2013 = 20+ million
2. Expected car sales for 2014 = 22+ million
3. 2013 was an 11% gain from 2012

Can you see the growth trend and why automobile makers like Audi, GM, Toyota and all the local homegrown Chinese auto makers want to see continued growth and are worried? Still, as the article rightfully noted; "Pressure is building on the government to step in as pollution chokes residents and traffic congestion turns roads into parking lots." Even if it isn't that drastic, the Communist Party has been known to make abrupt changes creating massive uncertainty almost crashing entire industries overnight.

Now then, is this the right play to stop China's pollution problem? Well, vehicles are one of the problems in the Chinese pollution disaster, however they also have coal mine fires that burn perpetually now, and factories, and coal fired plants without the proper scrubbers or all the new clean coal technologies which is available, but has not been part of all the new power plants they had built in recent years - cost, availability, new technology, etc. are amongst some of the reasons.

China wants to continue its growth, and it may push forward regardless of the future ramifications of doing so, more pollution, more traffic congestion and basically civilization grid-lock. So much for Central Planning and the law of unintended consequences, still, what comes next may impact the global economy too. Does China have a choice in any of this? Maybe this year, maybe the next, maybe 5-more, but eventually all this will come to a head. Indeed, I hope you will please consider all this and think on it.

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