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Infrastructure to cope with car growth lags
September 24, 2012, Monday
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AFTER forging ahead for more than a decade, China's auto market overtook the US as the world's largest by sales volume in 2009, and this year's it's on track to deliver 20 million units, almost ten times the 2000 figure.
So how long can the growth continue?
The question often leads to an analysis of the number of cars for every 1,000 residents - a widely accepted indicator of car ownership levels.
The reading for China, standing currently near 85, is way below comparable figures for more developed markets - such as 500 for Japan - suggesting the country is far from reaching the vehicle saturation point.
Banking on the untapped potential, automakers have raised sales targets and broken ground on new production facilities across the country. However, the risks of oversupply persist as the "golden age" of car sales may one day come to a screeching halt.
In July, Guangzhou, the southern hub of China's auto market, unexpectedly announced a cap on annual new vehicle registrations, at only half last year's total, to curb traffic growth. Four Chinese cities, including Beijing and Shanghai, have adopted similar sales restrictions, and rumor has it that other congested cities will follow suit.
Does China just have more cars than it can handle?
I think behind the apparent problem of too many cars highlights the gap between sharply higher auto sales and relatively slower infrastructure development to handle traffic volumes.
Before 2006, China's auto sales grew in line with road construction. The ratio of new car sales to kilometers of roadways was below the global average. Traffic gridlock then was not a serious problem.
The issue became more pressing as China's share of global car sales went from 10 percent in 2006 to more than 25 percent in 2011, far outstripping the speed of urban transit development. With over 50,000 new cars sold each day in China, roads and parking lots that were spacious enough only a few years back suddenly became overcrowded.
Addressing crunch
Local governments have been trying to address this crunch by building urban rail networks and public express transit to mitigate traffic flow. But they haven't been able to stop the road-versus-car conflict from escalating to a point where car purchase restrictions are needed.
The crux of problem is deeply rooted in urban planning that cannot be changed overnight. In big Chinese cities, large industrial centers sprawl on the outskirts, devoid of residential clusters because of zoning restrictions.
The ideas of industrial clustering, centralized resource management and intensive land usage have long been the guidelines for China's urban planning, leading to the concentration of quality public facilities, business centers and administrative resources. That often funnels traffic flow from all corners of the city into a single area, putting some roads under higher pressure than they can bear while leaving others under-utilized.
Building new roads and improving the efficiency of current ones are a long-term project. The whole point of controlling the growth of car volume is to buy more time to make improvements.
One day, with more roads in place and new urban layouts taking shape, restrictions on car purchases will surely be lifted.
We are saving today's car sales to get more in the future, which is how China's auto market can achieve sustainable growth.
So how long can the growth continue?
The question often leads to an analysis of the number of cars for every 1,000 residents - a widely accepted indicator of car ownership levels.
The reading for China, standing currently near 85, is way below comparable figures for more developed markets - such as 500 for Japan - suggesting the country is far from reaching the vehicle saturation point.
Banking on the untapped potential, automakers have raised sales targets and broken ground on new production facilities across the country. However, the risks of oversupply persist as the "golden age" of car sales may one day come to a screeching halt.
In July, Guangzhou, the southern hub of China's auto market, unexpectedly announced a cap on annual new vehicle registrations, at only half last year's total, to curb traffic growth. Four Chinese cities, including Beijing and Shanghai, have adopted similar sales restrictions, and rumor has it that other congested cities will follow suit.
Does China just have more cars than it can handle?
I think behind the apparent problem of too many cars highlights the gap between sharply higher auto sales and relatively slower infrastructure development to handle traffic volumes.
Before 2006, China's auto sales grew in line with road construction. The ratio of new car sales to kilometers of roadways was below the global average. Traffic gridlock then was not a serious problem.
The issue became more pressing as China's share of global car sales went from 10 percent in 2006 to more than 25 percent in 2011, far outstripping the speed of urban transit development. With over 50,000 new cars sold each day in China, roads and parking lots that were spacious enough only a few years back suddenly became overcrowded.
Addressing crunch
Local governments have been trying to address this crunch by building urban rail networks and public express transit to mitigate traffic flow. But they haven't been able to stop the road-versus-car conflict from escalating to a point where car purchase restrictions are needed.
The crux of problem is deeply rooted in urban planning that cannot be changed overnight. In big Chinese cities, large industrial centers sprawl on the outskirts, devoid of residential clusters because of zoning restrictions.
The ideas of industrial clustering, centralized resource management and intensive land usage have long been the guidelines for China's urban planning, leading to the concentration of quality public facilities, business centers and administrative resources. That often funnels traffic flow from all corners of the city into a single area, putting some roads under higher pressure than they can bear while leaving others under-utilized.
Building new roads and improving the efficiency of current ones are a long-term project. The whole point of controlling the growth of car volume is to buy more time to make improvements.
One day, with more roads in place and new urban layouts taking shape, restrictions on car purchases will surely be lifted.
We are saving today's car sales to get more in the future, which is how China's auto market can achieve sustainable growth.
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