In China’s big cities, cars barely move at rush hour. Beijing is building its seventh ring road to alleviate the crush. At nearly 1,000km long, it takes in much of the neighbouring Hebei province. This is a long way around just to beat the traffic.
Despite this incentive to (say) take a bicycle, China’s car market is big. In 2009 it overtook the US in size. Between that year and 2013, volumes grew at a compound annual rate of 15 per cent to reach nearly 18m, according to China Automotive Information Net. Growth is beginning to slow: up to November 2014, car sales are up 10 per cent year on year. Consultancy IHS forecasts a further slowdown to 7 per cent a year up to 2018, and more deceleration thereafter. High-end cars, IHS thinks, will outgrow the wider market.
That means BAIC, the latest Chinese carmaker to seek a Hong Kong listing, seems to be in a good spot. The company, which starts trading on Friday, has sold $1.4bn in shares, valuing the company at $8.6bn. At $8.90 — the middle of the proposed range — the shares cost 18 times 2013 earnings. Peer Brilliance, partner of BMW, is on 10 times forecasts for 2014.