Chinese passenger-car sales increase 7.6% y/y in 2012, more growth expected in 2013

The Chinese light vehicle market saw annual sales of 18,167,998 units in 2012, an increase of 5.5% year-on-year (y/y), IHS Automotive's data show. Within this total, the passenger-car segment achieved sales of 13,196,128 units in 2012, up 7.6% y/y, while the light commercial vehicle segment saw sales of 4.9 million, up 0.3% y/y.

The passenger-car market is the strongest segment in China. Within this segment, the C-segment is the strongest by volume sales. The C-segment continues to be the largest segment in China in 2012. The segment saw year-to-date (ytd) sales of 6,049,005 units, an annual increase of 11.1% from the 5.4 million units sold in 2011. The C-segment controls 45% of the overall passenger-car market in China, our data show. In December alone, a total of 595,652 cars were sold in the segment, an annual increase of 18.2% y/y. Within the segment, the best-selling model in the year was the Ford Focus with annual sales of 296,360 units, up 56.84% y/y. The Buick Excelle from General Motors (GM) was next with total sales of 277,071 units, an increase of 9.29% y/y. Toyota's Corolla was relegated to third spot with sales of 276,418 units, dropping 4.84% y/y and losing its top spot from the 2011 annual sales in China. In fourth spot was the Volkswagen (VW) Lavida with sales of 247,475 units, down 0.3% y/y. The VW Jetta took fifth position with total sales of 242,528 units during the year, an increase of 11.32% y/y. Within the C-segment, the top volume brand overall was VW with total sales of over 1 million units in the segment alone. VW sold 1,035,622 units in the C-segment in China during 2012, while Hyundai was the second-strongest volume-selling brand in the C-segment with sales of 570,756 units and GM's Buick was in third place with total volume sales of 450,383 units. Ford was in fourth spot with volume sales of 296,360 units, while Nissan took fifth place with total volume sales of 282,036 units sold. The battle for C-segment sales will continue in 2013 as automakers look to take control of the largest volume sector in China.

The D-segment was the second-largest segment in terms of sales in the passenger-car market in China during 2012. Total annual sales in the segment rose to 2.19 million units in 2012, up from 2.08 units sold in 2011. On a ytd basis the best-selling model in the segment was the VW Passat with sales of 233,321 units, up 40.67% y/y. The VW Santana was in second place with annual sales of 202,788 units, down 0.6% y/y, while the VW Magotan was in third spot with sales of 173,664 units, up 98.77% y/y. The Toyota Camry was in fourth place with sales of 145,402 units, up 1.17% y/y, and the Nissan Bluebird was fifth with sales of 133,823 units, up 3.55% y/y. VW continues to be the strongest brand in the D-segment with total sales of 647,362 units across its different models in 2012. VW sales in the D-segment grew by 31% y/y in 2012, an increase on the 493,788 units sold in the segment in 2011. Nissan was in second place with total annual sales of 223,895 units, down from the 281,592 units sold in 2011. Toyota was the third best-selling brand in the D-segment with annual sales of 205,248 units, down 1.86% y/y. GM's Buick was the fourth best-selling brand with sales of 171,541 units, a fall of 5.88% y/y, while Hyundai was fifth with total sales of 117,381 units in 2012, up 3.55% y/y.

Outlook and implications

The passenger-car market plays a major role in China. A total of more than 13 million passenger cars were sold in 2012, an annual increase of 7.6%, our data show. China's vehicle exports also grew during 2012, with total sales rising to more than 1 million units, of which passenger vehicles, specifically sedans, were the largest export group (see China: 18 January 2013: Chinese vehicle exports hit 1 mil. units in 2012). Exports are one contributing factor in vehicle sales growth in China, but they still account for only just over 1 million units. The majority of the new car sales stem from growth in the interior regions of China, where the cars-to-population ratio remains lower than in the coastal areas of China. This is where China's government aims to push further growth through increasing salaries and therefore higher disposable incomes.

China's automotive industry depends on the growth of the country's passenger vehicle market; demand for passenger cars in turn depends on the level of disposable income. China sees the automotive industry as a pillar of its economic strength, which can help the country maintain an annual GDP growth rate of more than 8%. Speaking at a recent industry conference, the vice-president of the Development Research Centre of the State Council, Hou Yun Chun, stated that by raising salaries across China, sales of vehicles could be sustained and this could help the country achieve a constant 8% annual GDP growth rate. "By the end of the next eight years, we hope our [China's] average salary can be doubled so we can increase our consumption power," he said, referring to statements made at China's recent 18th National Party Conference. "As living standards increase, we can see more cars being bought." Hou added that the country needs a GDP growth rate of 8.8% or above per year to bring about a doubling of salaries, which would raise personal disposable income within China and, therefore, bring continuous growth in demand in the automotive industry. The increase in sales in the automotive market would then prop up overall growth of China's economy, he said. "The auto industry is an important, pillar industry to realise the 8.8% GDP growth rate," Hou said.

The major brands that control the majority of China's passenger-car market are those automakers that push sales in the top volume-sales segments. VW is the strongest brand in China, and the Volkswagen Group is the strongest overall parent automaker in China with total sales of 2,608,896 units in 2012. The Hyundai Group, including the Kia and Hyundai brands, is the second-largest in the passenger vehicle segment with sales of 1,340,034 units in 2012, while GM is third with sales of 1,393,517 units. The VW brand saw sales of 2,050,193 units during 2012, followed by Hyundai with 859,595, the Nissan brand third with 751,509 units sold, Toyota fourth (745,565), and Buick fifth (697,455). VW gains its lead from strong sales in the two largest segments in the Chinese market: the car C-segment and D-segment.

The C-segment accounted for sales of more than 6 million units in 2012. The VW brand sold more than 1 million units in the C-segment alone, with models such as the Lavida and Jetta. The D-segment accounted for sales of over 2 million units in 2012, with the VW brand selling a total of 647,362 units of models such as the Passat, Santana, and Magotan.

In 2013, IHS Automotive expects the Chinese passenger-car market to grow by around 11% y/y including imports, an increase on the 7.6% year-on-year local growth achieved in 2012 which including imports the passenger car market in China rose 9% y/y .