Car-makers are selling a lot of cars in China, and sales are still rising strongly but they are growing at a much slower rate than in previous years, and margins are getting tighter in the world's most important car market after the US.
Owning a car is still the dream of a huge portion of China's 1.3 billion people, and the car companies are still doing all they can to make that dream come true and cash in on the country's remarkable economic boom.
But the market is becoming tougher.
Car sales, which have been relatively sluggish during the year so far, jumped 33 percent in September compared to a year earlier, the China Association of Automobile Manufacturers reported.
However, aggressive price cuts helped to spur the rebound in demand, so margins are under more pressure.Car-makers now have to deal with pressure to cut costs and offer discounts amid increasingly intense competition, cutbacks in government spending, and tightening restrictions on bank loans for buying cars.
The fast growing passenger car market boosted the overall vehicle sales picture, which rose 10 per cent year-on-year during the first three quarters of this year.
This is down from last year, when the growth rate was 15.5 per cent, and the year before when the market was growing at a breath-taking 34 per cent.
Car analysts said the market was chiefly thriving because of a rash of new product launches, as well as price cuts in the last two months.
Altogether, there were 354,000 cars sold in China last month, while in the first three quarters of the year, car sales rose 16.8 percent year-on-year to 2.8million units.
The figures show signs of market resilience, but longer term, people are decidedly less bullish on the outlook for the Chinese car market than they were a couple of years ago.
Carlos Ghosn, the joint chief executive of Renault and Nissan Motor, said at the Tokyo Motor Show last week that the China "bonanza" was over, and he added that combined with a slowdown in the United States on the back of rising energy costs and a discount campaign, the industry could be facing difficult years.
VW has seen its market share drop to 18 per cent from over 50 per cent in the 1990s. Hoping to regain lost ground, earlier this week the company announced plans to introduce up to 12 new models in China by 2009 while cutting costs and improving service. It said it was nearly halving its production target in China for 2008, and freezing investment in new capacity.
Shanghai Automotive Industry Corp, which has partnerships with GM and VW, said quarterly profits were undermined by compressed margins.
Sales of made-in-China vehicles were 4.14 million units from January to September this year, up 10 per cent from 2004. Sales of commercial vehicles - trucks and buses - dipped by 1.74 per cent to 1.33 million units in the first three quarters from the year earlier.
Sales of multipurpose vehicles, such as minivans, jumped 89 per cent to 13,800 units and sales of sport utility vehicles rose 56 per cent to 20,700, it said.
Jia Xinguang, an analyst with the China Automotive Industry Consulting and Development Corp, predicted that China's vehicle sales for 2005 would grow by 10 per cent from 2004 to around 5.6 million units. "Although the expected pace is slower than last year, it is quite reasonable, and healthy. China remains the world's fastest-growing major vehicle market, compared to North America, Europe and Japan," he told China Daily.
There has been a shift in the character of the market, with passenger vehicle sales now predominantly going to the private sector, instead of the public sector.
Even though the big, black sedan, Passats or Audi A6s, have dominated the market for many years, it's small cars that are driving the growth, micro cars and subcompacts which sell for less than 60,000 yuan (€6,200).
Buyers are tending to opt for smaller cars due to higher petrol prices. Nissan's Tiida, a new subcompact which sells as the Versa in other markets, was the best-selling model in September, at 13,700 units, just ahead of South Korean car-maker Hyundai's Elantra 1.6, which sold 13,300 units. The Elantra has just been chosen as one of the cars to become Beijing taxis. Chery Automobile Co sold 11,100 of its QQ minicar, with Shanghai Volkswagen selling 10,700 Santana sedans and General Motor Corp selling 10,400 Excelles.
So farthis year the Xiali, a compact made by Tianjin FAW Xiali, was the best seller, with sales totalling 133,800. The Elantra was a close second at 131,200 followed by the Excelle, with sales totalling 105,000, and Santana - once the market leader - at 100,300.