China auto industry challenged by slow infrastructure development

After more than two-years of rapid growth, China's booming passenger car market experienced a slow summer in 2011. With the future of the car market looking more uncertain than before, our reporter Lü Yao takes a look at the challenges facing the industry. Like thousands of car owners in the Beijing metropolitan area, Hou Junfeng bought his car three years ago. Although Beijing's license restriction policy doesn't affect him, he's finding owning a car may not be all its cracked up to be. Hou Junfeng, a Beijing resident said, "I can not drive my car every single day because of the traffic control policy; even when I'm driving, a lot of the time I just can't find a parking space near my workplace, home, or local shopping centers. And gas prices are expensive too. Having a car is kind of an inconvenience." A clash is emerging in many of China's cities between rapidly growing car ownership and the slower pace of infrastructure development. Efficient road networks and sound urban planning could be pivotal to the future development of the Chinese car market. Experts say severe traffic jams, a shortage of parking space, could all make life difficult for future car buyers. Du Fangci, Assistant Secretary General from China Assn. of Automotive Manufacturer said, "Well-rounded city development and redevelopment plans are closely tied to the car industry. Without infrastructure to back it up, the car industry is a castle on sand." Besides infrastructure, energy supply is also vital for a stable and healthy Chinese car market. China's increasing dependance on oil, and possible energy shortages in the future, may restrict the development of the car market. Foreign experts are echoing the concerns of their Chinese counterparts. Masashi Nino, chief representative of Japan Automobile Manufacturers Assn. said, "To maintain China's car market, coping with energy issues and developing alternative energy for vehicles will be key challenges for the future." Back in Beijing, Hou Junfeng is still driving. But for China's car industry, experts say the big growth markets of the future are going to be in the west of the country, along with the second and third tier cities.