China's auto sector will continue booming even after government stimulus measures expire, Nissan Motor CEO Carlos Ghosn said Thursday, warning that his company will struggle to meet demand. "The potential of the Chinese market is huge," Ghosn told reporters. "I'm very optimistic that no matter what is the (government) policy we are going to have growth in the (coming) years."
China's auto sales soared 77.9 percent in September from a year ago to 1.33 million units - the seventh straight month that sales exceeded the one million unit mark - thanks to government incentives aimed at boosting consumption. Last year, a total of 9.4 million units were sold in China, up eight percent from the previous year. Government measures included cutting taxes on cars with engines smaller than 1.6 litres and subsidising alternative-energy vehicles.
The tax cuts are due to expire at the end of this year. "I think there is more to this growth than just the tax reduction," Ghosn said. Japan's number three carmaker sold a record 400,632 passenger cars in China in the January to September period, an increase of 47.2 percent from a year earlier and exceeding the total number of units sold in all of 2008. Ghosn said the biggest challenge for Nissan, part-owned by Renault SA of France, was producing enough cars to meet fast-growing demand in China.
Nissan plans to boost the annual production capacity of its factory in southern Guangdong province by 250,000 units to 600,000 by 2011, taking its total capacity in China to 700,000 units. "We need to have capacity ready otherwise we will lose market share. But we are afraid it's not going to be enough," said Ghosn.
China became the world's largest car market in January, when sales outstripped the United States for the first time. Ghosn also said Nissan was in talks with government officials in the central Chinese city of Wuhan to buy its electric vehicle, the Leaf, once it starts rolling off production lines in Japan, Europe and the US in late 2010. But there were no immediate plans to manufacturer the zero-emissions vehicle in China, Ghosn added. "We are waiting for the policies to be established in China. We have no doubt that it will happen," he said.