As the world turns — so does the auto industry

News item: China is overtaking the US as the world’s biggest market for vehicle sales.

January marked the first month that more vehicles were sold in the People’s Republic of China than in the United States of America — about 790,000 in China, vs. nearly 657,000 in the US.

Not a surprising development, as China has four times as many people as the US, and its growing middle class sees auto ownership as an important symbol of status. Part of the sales surge in China was due to the government cutting in half the tax on smaller cars. Coming soon on the heels of the news that Toyota Motor surpassed General Motors in worldwide vehicle sales for 2008, though, this development seems like another harbinger of the notion that America’s manufacturing prowess is growing ever smaller in the rear-view mirror, as our carmakers and their parts suppliers line up for financial aid from the US government.

The reality is that while China’s automotive industry is outselling the US auto industry, it’s behind the US in the development and maturation of the industry. China has dozens of carmakers, and not all of them will survive the next few years. The industry is in a state of consolidation not unlike the US auto industry’s in the early 20th century. GM grew to become the world’s biggest automotive manufacturer — a title it held for 77 years — by being the great consolidator of American car makers in its first 25 years of existence. It bought up Buick Motor, Cadillac Automobile, Chevrolet Motor, Elmore Manufacturing, Oakland Motor Car (later known as Pontiac), Olds Motor Works and REO Motor Car (Oldsmobile), Rapid Motor Vehicle, and Reliance Motor Truck in those early decades.

What Chinese company will emerge as the GM of China’s automotive industry? The answer’s not clear; perhaps there will be two or three big carmakers in the end, in the way things settled out in Detroit.