Faced with sluggish markets across much of the globe, carmakers like to seek solace in China. Take Japan’s Toyota Motor, which on Tuesday announced a 7.5 per cent year-on-year rise in third quarter net income on the back of robust growth in China and other emerging markets. The world’s second biggest car market grew 22 per cent in 2007, and is forecast to expand up to 20 per cent this year. Much of the received wisdom about the market, however, is starting to look rather dated.

Just a few years ago, carmakers’ biggest fear was over-capacity as operators ploughed billions of dollars into plants – and were subsequently obliged to mark down prices on a regular basis. Today, they are fretting about insufficient capacity. So when a domestic acquisition effectively dissolved a joint venture between Nanjing Automobile and Italy’s Fiat, Nanjing’s new owner was quick to utilise the JV’s idle plant. Multinationals are tentatively eyeing up opportunities in cheaper parts of the country, where the government is offering tax incentives to woo investment inland. Those without money to spend are mulling more flexible options, including increasing the number of factory shifts.