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China’s auto market in 2005: double-digit growth

made 5,161,076 units of automobiles in the first 11 months of 2005, up 10.18 percent, compared with the same period of last year, according to CBU-Autostats. Sales were 5,231,516 units, up 13.60 percent.


China’s automobile market in 2005 is expected to exceed 5.8 million units in sales, up 14 percent year on year, according to CBU/CAR estimates based on available statistics and the historical trends in automobile sales over the past few years.


Overall, China’s automobile market in 2005 maintained the same steady and double-digit growth rate of 2004. The growing size of the passenger vehicle market (including cars, MPVs, SUVs and minivans), which registered an increase of 22 percent, helped sustain the 14 percent growth rate. Sales of the heavy-duty vehicles, including semi-trailers, had a major decline (see Table 1).


 


Segment analysis


 


As mentioned earlier, the major booster for the 2005 automobile market was passenger vehicles.


Total sales of passenger vehicles (including cars, MPVs, SUVs and minivans) were 3.61 million units in the first 11 months, up 21.96 percent year on year. Of these, MPVs contributed to the major growth of passenger vehicles, with sales up 36.99 percent.


November was a record month for the passenger vehicle sector as sales volume reached over 380,000 units. Estimated sales for December may surpass 430,000 units, bringing the total annual sales to over four million units in 2005.


Passenger car sales in 2005 reached 2.85 million uints, up a strong 28 percent over those of 2004.


Sales of commercial vehicles (including light trucks, light buses and mini trucks) totaled 1,009,780 units, up 7.19 percent in the first 11 months. Sales of light trucks were up 7.26 percent year on year. Those of mini trucks were much higher, up by 18.15 percent. Sales of light buses decreased by 6.5 percent.


China is expected to sell 1.1 million units of light vehicles for the entire 2005.


In sharp contrast with the stable growth of the passenger vehicle and commercial vehicle sectors, the heavy-duty sector (including heavy-duty and medium trucks as well as large and medium buses) declined. Sales in the first 11 months were down 13.78 percent year on year to 207,852 units. Total annual sales for 2005 are estimated at slightly over 220,000 units.


The large bus segment, however, registered a 16.94 percent growth in sales in the first 11 months.


 


Table 1. Automobile Sales and Output by Type in 2005


(in units)


                        Sales                                        Output


Vehicle Type               Jan.-Nov. 2005       % Change         % Share           2005(est)          an.-Nov. 2005        % Change         2005 (est)


Total                             5,231,516                13.60                 100.00               5,826,489         5,161,076                10.18                 5,743,599


Whole Vehicles         4,826,642                16.52                 92.26                 5,386,534         4,758,458                12.59                 5,305,766


Passenger                   3,609,010                21.96                 74.77                 4,040,628         3,538,986                16.41                 3,958,212


Commercial                 1,009,780                7.19                    20.92                 1,118,054         1,012,203                7.53                    1,120,950


Heavy-Duty               207,852                   -13.78                4.31                    226,731         207,269                   -15.34                226,604


Semi-Trailers              50,698                      -47.47                0.97                    52,246           51,093                      -46.00                53,348


Chassis                        354,176                   -3.30                  6.77                    388,830         351,525                   -3.24                  384,485


Source: CBU-Autostats


 


In the first 11 months, average monthly sales volume surpassed 475,000 units. March was the highest month, with total sales exceeding 600,000 units.


 


Performance of leading automakers


 


FAW, SAIC, Dongfeng, BAIC and Chang’an were the country’s top five automobile assembly groups. Their combined sales totaled 3,401,458 units, or 65 percent of the automobile market in China.


FAW remained as the leader in sales, reaching 912,786 units, taking up 17.45 percent of the market shares. However, the growth rate of FAW slowed down to only 1.02 percent over the same period of last year. SAIC and Dongfeng grabbed the No. 2 and No. 3 spots, sharing 16.15 and 12.22 percent of overall sales in the marketplace. As one of the fastest growing group corporations, Dongfeng’s year-on-year sales were up 39.82 percent, to a total of 639,159 units. Much of Dongfeng’s growth can be attributed to its passenger vehicle joint ventures with Nissan and PSA Peugeot Citroën.


 


Table 2. Sales and Output of Top Five Automakers, January-November 2005


(in units)


Company           Sales             % Change      % Share   Output        % Change


FAW                 912,786          1.02               17.45          899,400      -2.76


SAIC                 845,146          11.26             16.15          815,600      3.75


Dongfeng         639,159          39.82             12.22          646,653      37.10


BAIC                517,104          11.19             9.88           509,042      8.00


Chang’an          487,263          5.61               9.31           484,701      4.53


Total                 3,401,458       13.78             65.01          3,355,396    10.12


Source: CBU-Autostats


 


Performance of leading carmakers


 


Market share of Volkswagen continued to fall as its two JV manufacturers in China, Shanghai-VW and FAW-VW, lost almost ten percentage points in market shares in the first 12 months. Shanghai-VW sold 282,875 units of cars in 2005, a far cry from its goal of 370,000 units set at the beginning of the year.


Shanghai-GM surpassed Shanghai-VW to become the No. 1 carmaker in the country in the first 12 months, selling a total of 298,174 units of cars and taking up 10 percent of the car market shares.


Tianjin-FAW-Xiali had the largest single-brand sales with its economy Xiali model. Total sales in the first 12 months reached 193,008 units.


Dongfeng-Nissan continued its torrid ascent in sales, realizing an annual growth rate of almost 160 percent.


Low-displacement automobiles were in high demand in 2005. Sales of cars with 1.0L-1.6L engines were up by 23.4 percent in the first 10 months. Those of mini vehicles (1.0L or smaller) were up by 85.15 percent.


According to incomplete statistics, China launched 80 new vehicle models in 2005, covering almost every engine specification and price range.


 


Table 3. Sales and Output of Top Manufacturers by Sector, January-November 2005


(in units)


Sector                                       Company                             Sales                    % Change                  % Share              Output                     % Change


Passenger Vehicle


Car                                           Shanghai-GM                       259,215               27.95                          10.17                   273,949                   31.97


MPV                                        Jianghuai                              28,978                 31.72                          20.77                   29,700                     28.48


SUV                                         Great Wall                            25,872                 2.67                            14.08                   26,263                     5.90


Minivan                                    SAIC-GM-Wuling               236,317               45.14                          32.05                   238,369                   46.96


Commercial Vehicle


Light bus                                  Brilliance-Jinbei                   9,024                   -13.53                         40.30                   47,648                     -17.92


Light truck                                Beiqi-Foton                           250,218               0.45                            35.70                   244,790                   1.01


Mini truck                                 Chang’an                              64,635                 18.14                          34.53                   65,647                     19.03


Heavy-Duty Vehicle


Heavy-Duty truck                   Dongfeng                             17,109                 -32.55                         27.88                   16,161                     -36.94


Medium truck                          Dongfeng                             25,744                 -19.02                         23.06                   25,946                     -19.92


Large bus                                 Yutong                                  5,446                   36.08                          33.24                   5,787                       36.33


Medium bus                             Kinglong                               6,150                   2.89                            33.29                   6,197                       4.56


Source: CBU-Autostats


 


Shrinking profit and overcapacity


 


2005 saw continued shrinking of profit in automobile assembly, due to considerable vehicle price reduction in the second half of the year and continued cost increase in steel, energy and raw materials. The average price of cars in 2005 was decreased by ¥17,000 ($2,125) to ¥129,300, down 11.63 percent from the same period of 2004.


In the first three quarters of 2005, of the total 6,224 automobile enterprises, profit was down 39.29 percent year on year. The industry reaped ¥8 billion less in profit. The profit margin for automobile sales was only 3.77 percent. That for vehicle manufacturing was 3.99 percent, according to industry analysts. The profits of FAW, SAIC and Dongfeng, for example, were down 75.86, 59.29 and 21.23 percent, respectively.


Under pressure from OEMs, suppliers were forced to reduce price and as a result, profit of China’s parts and components sector was reduced by 54.71 percent in 2005 compared to that of the previous year.


By the end of 2005, the country had accumulated a vehicle output capacity of eight million units, or 25 percent overcapacity, according to the State Development and Reform Commission (SDRC). These do not include an additional 2.2 million units under construction. The output capacity of the country’s top six automobile groups, FAW, SAIC, Dongfeng, BAIC, Chang’an and GAIC, now totals over five million units.


 


Import and export


 


China’s total import and export value of automotive products reached $20.36 billion in the first 11 months of 2005, according to CBU-Autostats.


Export of automotive products, including whole vehicles, increased by 69.39 percent compared with the same previous period, to a total value of $8.35 billion. Export of motor vehicles (excluding chassis) reached 955,584 units, up 165.60 percent year on year.


In contrast, China’s total import value in the first 11 months of 2005 was down 5.25 percent to $12.01 billion. China imported a total of 145,146 units (excluding chassis) of automobiles worth $4.51 billion, down 9.29 and 6.41 percent, respectively.


 


Table 4. Import & Export of Vehicles & Components by Type


 


            January-November 2005                       % Change


Import                          Units             Value (in $1,000)    Units               Value


Grand Total                                       12,007,076                                  -5.25


Motor Vehicle               145,146        4,506,162              -9.29               -6.41


Chassis with Engine       514               13,965                   21.80             -7.85


Engine                           762,010        1,465,743              -22.43             45.26


Body                             1,868            7,575                     -80.93             -62.57


Parts & Components                         6,013,632                                    -11.74


Export


Grand Total                                       8,349,177                                    69.39


Motor Vehicle               955,584        1,780,404              163.07            165.60


Chassis with Engine       11,487          40,941                   300.94            145.05


Engine                           3,319,085     581,167                 156.95            84.92


Body                             11,425          11,496                   -49.50             126.44


Parts & Components                         5,935,168                                  51.31


Source: CBU-Autostats


 


Passenger vehicle import volume was down 5.12 percent to 139,915 units in the first 10 months, representing an import value of $4.03 billion, slightly higher than 2004. Of the total, there were 61,000 units of cars, or 47.6 percent of the total. Import of SUVs was up 41.4 percent, to a total of 53,000 units.


Commercial vehicle import witnessed the biggest decline with volume down by 58.28 percent (5,231 units) and value down by 45.72 percent ($412.27 million). The value of imported parts and components was $6.01 billion, down 11.74 percent.


Commercial vehicles took up the biggest volume in export. Export of pickup trucks totaled 79,000 units in the first 10 months, or 58.5 percent of the total export. Cars sent overseas were 22,000 units, taking up 16.3 percent.


 


Outlook of China’s automobile market in 2006


 


After a major adjustment to a slower but stable growth in 2004 and 2005, China’s automobile market is moving into a crucial year in 2006, the first year of China’s 11th Five-Year period.


China’s overall political and economic environment in 2006 will remain positive. Both manufacturers and consumers are becoming more realistic and mature compared to 2002 and 2003. As China further moves into a consumer car market, low-displacement vehicles will be the driving force of growth, as evident in 2005.


Price reduction, rising cost, declining profit, fierce competition and overcapacity will remain issues for auto manufacturers in 2006. New policies and regulations, such as consumption tax, fuel consumption limits, fuel tax and beneficial policies for local R&D and independent brands are expected to be promulgated and they will have a major impact on the overall direction of the automobile market.


In general, China’s automobile market will maintain a stable and double-digit growth in the new year. Automobile sales are expected to reach 6.7 million units, if the market maintains the current momentum.  Sales of passenger vehicles (excluding minivans) are expected to have a 25 percent growth to a total of 3.5 million units.

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