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In search for growth spots

Much as has been expected, China’s automobile sales in June remained flat. The auto market did not pick up momentum as did housing when the stock market was at its height in March and April. With the tumble of the stock market in June, sales of cars plummeted, down 15.3 percent compared to the same month in 2014. 

In the final analysis, automobile sales are closely related to the country’s macro economy. Premier Li Keqiang said in Europe that China is capable of maintaining this year’s GDP growth to 7 percent. If this is true, the growth rate of automobile sales, according to one theory popular in the 1980s and 1990s, should be 1.5 or even 2 times of the GDP. But such a theory is now highly questionable because today’s China faces a host of limiting factors, such as air pollution, oil dependency, traffic congestion, parking, license and driving restrictions, hurdles for used car sales, to name a few.

Sales of passenger vehicles (cars, MPVs and SUVs) in June saw a negative growth of 1.6 percent. And those of cars were down 15.3 percent, a historical record. Even the demand for MPVs fell by 3.1 percent year-on-year. The market’s favorite is still SUVs, which saw a big jump by 41 percent.

This shows that there are still growth spots in China and automakers need to find them. Shanghai-Volkswagen’s Haona station wagon may be an example. Consumers today are different from those in the 1980s and 1990s when the Santana station wagon failed to appeal to them.  

Sales and market shares of PV makers in China in H1 2015

Country origin

Passenger Cars

SUV

MPV

June

January-June

June

January-June

June

January-June

Sales (units)

Market Share (%)

Sales (units)

Market Share (%)

Sales (units)

Market Share (%)

Sales (units)

Market Share (%)

Sales (units)

Market Share (%)

Sales (units)

Market Share (%)

German

231,965

26.86

1,683,778

28.88

49,849

10.79

281,155

10.39

3,644

2.90

22,803

2.25

U.S.

150,408

17.41

918,969

15.76

55,089

11.92

256,469

9.48

7,872

6.27

42,098

4.16

Japanese

199,813

23.13

1,066,945

18.30

88,603

19.17

419,651

15.51

5,958

4.75

32,944

3.25

Korean

71,148

8.24

631,611

10.83

26,502

5.73

181,775

6.72

 

 

 

 

French

35,580

4.12

265,694

4.56

14,378

3.11

96,850

3.58

 

 

 

 

Chinese

160,892

18.63

1,221,744

20.95

223,753

48.56

1,450,484

53.64

108,027

90.56

914,997

90.90

 

One other shining spot in China is new energy vehicles, which claims to have grown by 888 percent year-on-year. No doubt the NEV market remains a policy market. But we should not underestimate the growing interest of consumers in the first half of the year. Total sales of NEVs were 49,474 units in the first six months, averaging 8,245 units a month. But the actual sales in June were 11,156 units, much higher than the average. Chinese carmakers BYD, BAIC, Chery, Geely, JAC, Zotye, SAIC and Dongfeng now dominate NEV production and sales.

In traditional vehicle sales, Chinese brands should be commended for their performance in the first half of the year. The market share of Chinese car brands maintained 21 percent in the first six months, although it fell slightly down from 20 to 19 percent in June. But market shares of Chinese MPV and SUV brands enjoyed a dominant position: 90.9 and 53.6 percent, respectively, in the first six months.

For Chinese automobile brands as well as for China’s stock market, confidence is more important than gold.

(Rewritten by Wayne Xing and Kevin Wang based on author’s article published on auto-biz.cn)

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