China sold 24.6 million new vehicles in 2015, a 4.7 percent increase from 2014, according to numbers released by China Association of Automobile Manufacturers (CAAM). Sales growth steadily increased starting in October thanks to the government’s sales tax reduction on small passenger vehicles.
Sales performance for the year showed a “V” shape pattern, declining in the first half of the year and bouncing back after July, indicated in the chart below. According to local Chinese media, the drop in sales was associated with the slowdown of the overall economy, while the sales tax incentive introduced late in the year pulled the sales back up.
In the passenger car segment, 21.15 million new vehicles were sold in the past year, seeing a 7 percent increase. The combination of sales tax reduction and increasing demand were the driving forces.
SUV sales reached 6.22 million, a whopping 52 percent jump from 2014. The hot sale of the cheap compact SUVs reflected the taste and choice of young buyers. The microvan segment saw a 10 percent growth with 2.11 million in sales. This was lower than expectation.
The sedan segment, however, suffered a 5 percent decline with 11.72 million in sales. Cheye Zatan, a local analyst, attributes the decline to three reasons. First, growth becomes difficult for the sedan market which has become huge. Second, Chinese buyers are not so much interested with entry level cars, resulting in the shrinking of the sub-compact car segment. Third, more and more consumers prefer SUVs to sedans.
Sales of microvans dropped by 17 percent, with 1.1 million in sales. Lacking a competitive edge, microvans are quickly being replaced by better alternatives.
Sales of commercial vehicles declined by 9 percent, with 3.45 million in sales. Truck sales decreased by 10 percent while bus sale dropped by 2 percent. The decline was the result of a weak economy.