(MENAFN - AFP) Growth in China's auto market, the world's largest, is forecast to slow to an average eight percent annually from now until 2020 as consumers' tastes change, consultancy McKinsey said on Wednesday.
The country's auto market grew an average of 24 percent a year between 2005 and 2011, the global management consulting firm said in a newly issued report.
Despite the slowdown -- from a 24 percent average between 2005 and 2011 -- China will remain the world's top market with sales of 22 million passenger cars in 2020, due to steady economic growth, rising incomes and road building, it said.
"Chinese consumers are growing more sophisticated about cars and their tastes are evolving," the report said.
"The Chinese car market is becoming more like that of North America, Europe and Japan and perhaps even more complex, given the many regional and segment differences."
Figures from a Chinese industry group show China's passenger car sales rose 6.9 percent annually in the January-October period to 12.57 million vehicles.
Growth so far this year shows improvement from the 5.2 percent for all of 2011, but is far below the 33 percent recorded in 2010, the China Association of Automobile Manufacturers said.
"Automakers must also factor in the uncertainties that may slow or disrupt market growth," McKinsey warned.
"The volatility, combined with chronic overcapacity, adds greatly to the challenges of doing business in the Chinese market."
Uncertainty over the global economy and policy moves by the Chinese government could have a negative impact, the consultancy also said.
Some Chinese cities have already slapped limits on car numbers due to concerns over traffic congestion and air pollution.
McKinsey said the business environment could also face "disruption" due to industry consolidation, while emerging alternatives to car ownership, such as better public transport, could also present a challenge.
Still, consumers were expected to buy bigger and more expensive vehicles, with sales of sport utility vehicles (SUVs) forecast to rise 13 percent annually from 2011 to 2020, it said.
