China's automotive industry is growing surprisingly fast. In 2008, China surpassed the United States to become the world's second largest auto-making nation behind Japan. China also is poised to pass Japan in 2009, according to research from El Segundo, Calif.-based analyst firm iSuppli Corp.

"During the last five years, China more than doubled its domestic automobile production," says Egil Juliussen, PhD, director and fellow, automotive research, for iSuppli.

"China, which produces most of its cars for domestic sale, benefits from a booming economy and the soaring disposable income of its consumers," Juliussen says. "Meanwhile, U.S. auto production has been declining steadily due to increasing imports from the NAFTA nations Canada and Mexico-as well as from Europe and Asia."

China's production numbers consist of passenger-car and light-truck production from domestic companies as well as joint ventures between Chinese and foreign automakers. The multinational companies produce about 50 percent of the autos in China.

"Although global auto sales fell in 2008, Japan-which produces cars mainly for export-barely reduced production. This generated a major rise in excess inventory, so Japan will cut production this year," Juliussen says. "The result is that China will have the lowest production cutback of any nation and will become the auto production leader in 2009."