Boston, MA -- (SBWIRE) -- 12/31/2012 -- Following relatively flat growth in vehicle sales of 0.36% in 2011, BMI expects a slightly higher level of growth for the sector in 2012 at around 2.1%. The lack of vehicle production in Hong Kong means that the market's potential for expansion is limited. Nonetheless, the parts sector remains buoyant, as sales of automotive components were up 5.9% y-o-y in July 2012 as a result of rising demand.

Government support for electric and environmentally friendly vehicles continued in Q312, as testing German automaker Daimler's electric Smart cars continued as part of its programme to reduce pollution levels. Furthermore, representatives from Japanese carmaker Nissan met with Hong Kong's Chief Executive Leung Chun-ying in September 2012, to discuss the possibility of replacing the region's aging taxi fleet with the company's electric cars over the next two or three years.

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Meanwhile, Daimler's Mercedes-Benz unit added the E 250 Sport Saloon model to its local showrooms in September 2012, following a strong response to its E-Class executive sedan. The fuel-efficient luxury model also qualifies for a tax rebate under the government's Environmentally Friendly Petrol Private Car programme. Chinese carmaker BAIC is also keen to add to its luxury vehicle offerings, and its BAIC Motor passenger car unit has announced plans to list its shares on the Hong Kong Stock Exchange in 2013, in order to generate US$1.6bn to fund the expansion.

Japanese carmaker Nissan's decision to situate the global headquarters of its luxury Infiniti brand in Hong Kong marks the company's confidence that the location will facilitate its expansion in the world's emerging markets. Nissan hopes that the high-end unit will be seen as a brand in its own right, however, Q312 has seen heightened tension between Japan and China over territorial disputes. The situation has resulted in a number of Japanese brands scaling back their operations in mainland China - Japanese carmaker Toyota, for example, has adjusted output from its facilities in the country as a result of violent anti-Japan demonstrations. The situation has certainly affected investor sentiment towards Chinese carmaker Dongfeng Motor - a partner of Japanese automakers Honda and Nissan - on the Hong Kong Stock Exchange. Due to the import-dependent nature of Hong Kong's autos industry, there are worries that consumer sentiment could affect companies such as local retailer Crown Motor - the official distributor of Toyota's vehicles in region.

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