Chinese Vehicle Market Drops 1.3% Y/Y in YTD on Lower CV Sales—CAAM
Despite a strong showing for passenger-car sales in April 2012, year-to-date (YTD) vehicle sales in China are down as weakness in the commercial vehicle (CV) market curtails a full recovery.
IHS Global Insight Perspective
China's vehicle market shrank by 1.33% year-on-year (y/y) in the first four months of 2012, with combined sales coming in at 6.42 million vehicles. However, in April 2012 alone, sales jumped by 5.2% y/y to 1.62 million units.
Although down on a sequential basis, strong April sales could indicate a full recovery in the world's largest automotive market.
Domestic demand seems to be returning because of new model launches during the Beijing Motor Show and sales performances in the next couple of months will determine whether the Chinese market contracts in the first half of 2012.
Data from the China Association of Automobile Manufacturers (CAAM) show that the domestic vehicle market continued its recovery in April 2012, although cumulative sales in the first four months are still down. In April, a total of 1,624,400 vehicles were sold in China, representing y/y growth of 5.2% compared to April 2011. On a YTD basis, however, sales remained negative, dropping 1.33% y/y to 6,417,600 units. Sales growth during April was primarily led by a strong recovery in the passenger-car segment, which registered a 12.5% y/y jump in sales to 1.28 million units, including sedans, sport utility vehicles (SUVs), multi-purpose vehicles (MPVs), and minibuses and minivans. However, April vehicle sales were down 12.46% on sales in March while sales of CVs remained weak too, declining by 14.97% y/y to 348,400 units during the month.
Automakers with strong foreign partners continued to do well, as reflected in the double-digit sales growth achieved by the SAIC Group and the Dongfeng Group. SAIC saw its sales rise by 13.29% y/y in April, while its YTD sales were up 9.33% y/y; Dongfeng saw an increase of 6.41% y/y in April, while its YTD sales were up 5.38% y/y. Sales were also strong at FAW, which registered a sales jump of 18.04% y/y in April. Meanwhile, GAC and Great Wall witnessed sales jumps of 24.68% y/y and 25.79% y/y respectively. Changan, BAIC and Chery were among the losers during the month.
China's Top 15 Automakers
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Sedan and SUV Sales Jump; Commercial Vehicle Sales Remain Down
Overall, Chinese vehicle sales were lifted in April by continued strength in the sedan and SUV segments. The sedan market totalled 890,300 units in April, up 12.61% y/y, although it came in nearly 4.8% less than the previous month. YTD sedan sales also moved into the positive zone due to strong demand in the month. Sales of SUVs rose by 33.59% y/y to 156,500 units during the month, further boosting the segment's YTD growth rate to 21.76%. Demand for SUVs has remained largely immune to the cooling automotive market in the country. CAAM expects SUV sales to jump 16% this year to 1.85 million units. However, demand for CVs continued to drag on the overall sales performance. CV sales dropped 14.97% y/y during the month to 348,400 units while YTD sales were down 11.62% y/y to 1.36 million units. Sales of minivans also dropped marginally in the month as government stimulus measures came to an end.
Within passenger vehicles, foreign brands continued to enjoy strong demand, but China's homegrown passenger-vehicle brands also registered sales growth of 5.12% y/y to 519,900 units in April, albeit down 13.85% on a sequential basis. During the first four months of 2012, sales of the country's domestic brand passenger vehicles remained down 5.2% y/y to 2.13 million units.
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Outlook and Implications
Prior to the data released by the CAAM, most global automakers, particularly Japanese OEMs, had reported strong Chinese sales performances in March (see China: 8 May 2012: Toyota's Chinese Sales Jump 68% Y/Y, Mazda's Drop 19% Y/Y in April). April vehicle sales were strong, even though the month had only 19 working days, as consumers rushed to the showrooms ahead of the Labour Day holiday. This is a marked improvement this year, which started on a weak note, shrinking nearly 6% y/y in the first two months (see China: 14 March 2012: Chinese Vehicle Market Down 6% Y/Y in YTD, Exports Up—CAAM).
According to Lin Huaibin, IHS Automotive's light-vehicle sales manager, Chinese vehicle sales growth is likely to remain positive in the next couple of months, boosted by the recent flurry of new model launches, the recent fuel price reductions and resurgent Japanese automakers. Anticipating higher sales of the recently launched products, automakers have increased dealer inventories, in some cases by as much as 100,000 vehicles. As a result of the upbeat sentiment, YTD sales, which are currently in the red, may become positive over the next couple of months. While CAAM has not made any change to its forecast for full-year sales growth of 8% y/y, IHS Automotive expects the Chinese light vehicle market to grow 7.5% y/y to 18.9 million units.
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