The world is looking to China for strength. China is taking a breather. By Bertel Schmitt, CEO Sinamotive Group (HK) Limited.

When times were good, the big automakers looked at China as a threat. When auto sales plummeted in the U.S., and fell in Europe, automakers looked to China to save their bacon. China won’t disappoint. But it can’t save them all. Sales figures just released by the China Association of Automobile Manufacturers, say that passenger vehicle sales in China fell for a second month in a row in September. They dropped 1.4% from the same period in the prior year to 552,800 vehicles. There are worries about a demand slowdown.

Sales of passenger vehicles in the January-September period increased by a solid 11.4% to 5.1 million units. 2007 had seen 21.8%. Based on the September drop in passenger-vehicle sales. a full-year sales growth in the single digits is being projected. What is worrysome is that September is usually a strong sales month in China, when consumers buy cars ahead of the Golden Week holiday.

The notable stand-out was Volkswagen AG. They sold 772,783 vehicles in China from January to September, a 13% rise compared to the same period in the prior year. Demand for Volkswagen’s Audi luxury brand bolstered the parent company’s sales. Volkswagen wants to sell one million units in 2008, an increase of 9.8% from the 910,491 vehicles sold in 2007. According to the company, Volkswagen will sell more cars in China than in its home market Germany in 2008, China can’t save ‘em all. But they save Volkswagen.

The shift into lower gears doesn’t mean that a saturation of the Chinese auto market would be near. China just started when it comes to cars. In 2007, the total number of vehicles in China was 57 million units. That total also counts 14.68 million three-wheeled vehicles and low-speed vans. As it stands, China’s vehicle ownership per thousand populations is below 50. The number is 740 in the United States, and more than 500 in Europe. It will take a long time for China to reach saturation. Total world output is 69 million cars per year. Even if the whole world would produce cars for China only, it would take more than ten years bring China’s market to saturation.