China's rise to create truly global auto market

By Nick Carey - Analysis

CHICAGO (Reuters) - In the century since Henry Ford rolled out his first Model T -- the world's first mass-produced, affordable car -- in 1908, America has been the world's No. 1 auto market.

Nothing lasts forever.

Some day in the not-too-distant future the rise of China's middle class and its growing hunger for cars will push aside the U.S. auto market and grab that top spot.

That in and of itself makes sense given China's 1.3 billion-plus population -- a fifth of the world's total -- and robust economy, which is not growing by double-digits anymore but is still enviably healthy.

"The Chinese auto market is going to explode exponentially over the next five to 10 years," said Mirko Mikelic, an analyst at Fifth Third Bank. "They have an untapped consumer base that is constantly growing, so I don't think it would surprise most people that China is expected to surpass the United States in the next 10 years."

But China's rise to the top in numerical terms has some broader implications for the global auto sector.

As ever more people in the country seek to buy their first car, the expectation is that small, low-cost and rugged cars -- rugged because China's roads are still a work in progress, not unlike American roads of Ford Model T days -- will dominate the Chinese market.

U.S. automakers have not focused on building small cars over the years, which means more vehicles will be developed in Europe and Asia, continuing a long-term shift away from Detroit as a research and development center.