ABSTRACT
China’s saloon production and passenger vehicle production are subject to a normal distribution. The improvement of average urban household income level and the changes in income inequality are the main factors for the expansion of saloon and passenger vehicle production. The expansion multiplier from automobile production to total output value of heavy and chemical industry is 1.2. Since 2000, China’s economy has entered a new stage of heavy and chemical industrialization, and its economic growth has entered a new round of the cycle, with the longest rising period and the highest average annual growth rate. The rapid development of household passenger vehicles has become the most important foundation of domestic demand. Urban household passenger vehicles have entered into a maturing stage with declining growth, and it is expected that assenger vehicle production will reach its maximum value around 2016. Therefore, in the present stage, in order to stimulate domestic demand for passenger vehicles, it is necessary to encourage renewed demand, to develop new markets and to reduce the income inequality among households. In this way, we can stimulate domestic demand for passenger vehicles at the present stage and improve the role of the automobile industry in promoting the development of China’s heavy and chemical industry and the growth of the Chinese economy.
