Over­all sales slow, but pat­terns dif­fer by sec­tor

Pre­mium brands, SUVs see strong growth, while do­mes­tic au­tomak­ers over­take South Korean mar­ques’ share, Li Fusheng reports.

China Daily (Hong Kong) - - MOTORING -

h i n a ’s g i g a n t i c c a r mar­ket, which had been in the fast lane for years, is now hit­ting speed bumps, yet the countr y ’s lead­ing in­dustr y as­so­ci­a­tion said it re­mains cau­tiously op­ti­mistic about the mar­ket this year.

A to­tal of 13.35 mil­lion cars were sold in the first half of the year in the world’s largest car mar­ket, statis­tics from the China As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers show.

De­spite a 3.8 per­cent g r o w t h y e a r - o n - y e a r, t h e growth rate was 4.3 per­cent­age points lower than in the same pe­riod last year.

The pas­sen­ger car seg­ment had a poorer show­ing than the over­all car mar­ket, ac­cord­ing to the as­so­ci­a­tion. With 11.25 mil­lion cars sold from Jan­uar y to June, the seg­ment edged a mea­ger 1.6 per­cent.

T h e p i c t u r e c o u l d h av e been even uglier with­out peo­ple’s last­ing en­thu­si­asm f o r S U Vs , f o r w h i c h s a l e s soared nearly 17 per­cent yearon-year to 4.52 mil­lion in the first half of the year.

All other seg­ments — sedans, mul­ti­pur­pose ve­hic l e s a n d m i n i v a n s — s aw sales fall, rang­ing from 3.2 per­cent to 25.3 per­cent.

Ye t C h e n S h i h u a , d i r e c - tor of the CAAM’s in­dus­try in­for­ma­tion sec­tion, said the sit­u­a­tion is mak­ing a turn for the bet­ter, as ev­i­denced by the June sales, which were up 5.6 per­cent from May to reach 1.83 mil­lion.

“His­tor­i­cally, sales in June are usu­ally lower than in March to May, so the growth in June in­di­cates that the neg­a­tive ef­fect of the car rush late last year is al­most over,” he said.

In late 2015, China in­tro­duced a 50 per­cent pur­chase tax cut on cars with en­gines no larger than 1.6 liters, which had prompted many to make ear­lier pur­chases be­fore it was re­placed by a smaller 25 per­cent cut start­ing this year.

Xu Haidong, an as­sis­tant to the CAAM’s sec­re­tary-gen­eral, said the or­ga­ni­za­tion is cau­tiously op­ti­mistic about the car mar­ket.

One rea­son is that China has a huge de­mand for cars. Statis­tics from Guanghui, C h i n a ’s l a r g e s t c a r d e a l e r group, show that on av­er­age there are less than 150 cars per 1,000 peo­ple in China, far lower than in de­vel­oped mar- kets like the United States, which had more than 800 in 2015. Xu said the 25 per­cent tax cut, which is to ex­pire by the end of this year, would cre­ate the same phe­nom­e­non seen last year, help­ing to push up car sales in the sec­ond half of the year.

“So the CAAM does not ad­just the es­ti­mate made ear­lier this year that the mar­ket will fin­ish the year with 5 per­cent growth,” said Xu.

Pre­mium mar­ket

S u r p r i s i n g l y, p r e m i u m brands stand un­scathed in the over­all sag­ging car mar­ket. In fact, most of them are mak­ing re­mark­able progress.

The top 10 best-sell­ing mar­ques saw com­bined sales of nearly 1.2 mil­lion cars in the first six months of this year, and eight of them saw dou­ble-digit growth rates.

Cui Dong­shu, sec­re­tar ygen­eral of the China Pas­sen­ger Car As­so­ci­a­tion, said in ad­di­tion to Chi­nese peo­ple get­ting richer, the grow­ing num­ber of l ower-priced, entr y-level pre­mium cars of­fered are at­trac ting c us­tomers.

An­other im­por­tant rea­son for their ris­ing sales is dis­counts.

A re­port by the Na­tional Busi­ness Daily shows that some dis­counted mod­els from pre­mium brands are close in price to those from vol­ume brands.

This sales growth is re­sult­ing in fiercer com­pe­ti­tion. Mercedes-Benz ranked No 1 by sell­ing 304,017 cars in China, its largest mar­ket world­wide, post­ing a 34 per­cent growth rate year-on-year.

BMW came in sec­ond, which sold 10,000 fewer v e h i c l e s than its long-time ri­val in the same pe­riod.

Audi, which had been the sales cham­pion un­til 2016, lagged far be­hind due to a half-year saga with its deal­ers start­ing in Novem­ber, with some 40,000 fewer ve­hi­cles sold than BMW.

An­a­lysts be­lieve MercedesBenz and BMW will com­pete for the crown this year, while Audi, though al­most cer­tain to lose the ti­tle it has kept for decades, is ex­pected to nar­row the gap.

In June, Audi saw its sales grow 1.7 per­cent year-on-year, the first time it saw monthly growth this year.

Sec­ond-ech­e­lon mar­ques’ sales grew even faster. GM’s Cadil­lac oc­cu­pied fourth place by sell­ing 81,000 ve­hi­cles in the first half of the year, see­ing its sales soar 7 1 per­cent year-on-year.

Lin­coln, Ford’s pre­mium arm, was the fastest-grow­ing brand.

Its Jan­uar y to June sales to­taled 24,500 ve­hi­cles, surg­ing 97 per­cent year-onyear.

C hi­nese au­tomak­ers are also do­ing a de­cent job. Statis­tics from the CAAM show that over­all they de­liv­ered 4.94 mil­lion pas­sen­ger cars from Jan­uary to June, up 4.3 per­cent year-on-year, more than dou­ble the growth rate of China’s pas­sen­ger car seg­ment as a whole.

As a re­sult, they seized a 43.9 per­cent mar­ket share by the end of June, 1.1 per­cent­age points higher than the same pe­riod last year.

An­a­lysts be­lieve t hat Chi­nese brands, with their im­prov­ing qual­ity and rich SUV line­ups, have won over cus­tomers who would oth­er­wise pur­chase South Korean brands, whose mar­ket share in the same pe­riod al­most halved to 3.8 per­cent.

Chi­nese brands them­selves are get­ting in­volved in fiercer com­pe­ti­tion.

Fitch Rat­ings ex­pect some small, weak brands to see lower profit, while brands with com­pet­i­tive prod­uct of­fer­ings in the past twelve months, in­clud­ing Geely and GAC Mo­tor, are likely to out­per­form in sales growth and prof­itabil­ity.

New en­erg y ve­hi­cles are also gain­ing mo­men­tum.

In June, sales of elec tric cars, plug-in hy­brids and fuel cell cars hit 59,000 ve­hi­cles, a 33 per­cent rise year-on-year, ac­cord­ing to the CAAM.

In the first half of the year, such ve­hi­cles to­taled nearly 200,000 ve­hi­cles, up 14.4 per­cent from the same pe­riod last year.

Sales in pre­vi­ous months were low be­cause start­ing this year the au­thor­i­ties are com­pil­ing a new list of cars el­i­gi­ble for gov­ern­ment sub­si­dies, fol­low­ing the scan­dal of sub­sidy cheat­ing that was ex­posed last year.

By July 6, 1,983 mod­els have been put on the list, sim­i­lar to the level of late 2016.

The over­all sit­u­a­tion is re­turn­ing to nor­mal and it is likely to reach the es­ti­mate of 800,000 ve­hi­cles the CAAM made at the start of the year, said Xu Yan­hua, a deputy sec­re­tary-gen­eral of the or­ga­ni­za­tion.

direc­tor of the CAAM’s in­dus­try in­for­ma­tion sec­tion were sold in China in the first half of this year

Con­tact the writer at li­fusheng@chi­nadaily.com. cn

LI FUSHENG / CHINA DAILY

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