China's Auto Industry

China’s passenger car sales have been growing at a rate of 40-60% annually since 2002, and China now represents the second largest passenger car market in the world. The rapid development of this market has created new business opportunities and, at the same time, encouraged investment leading to overcapacity. This case describes this growth in the automobile industry and related industries (components, finance and other services) and provides the basis for discussing strategic options for domestic and foreign players in this industry.

This case will help students understand the transitions in one of China's most dynamic industries, and explore the different opportunities and challenges those transitions represent for different types of firms -- domestic and foreign, incumbents and new entrants. It can also be used as a background reading for cases on specific firms. Students may also be asked to do their own research on specific firms and, together in class, contrast the competitive challenges and opportunities facing different firms in the same industry.