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Bigger
Still Better in China Automotive Resources Asia Ltd China's passenger vehicle market recorded sales of 325,562 units in October, up 25% from last year. All segments recorded growth except micro car, which was down 7%, and SMPVs, which were even. The market through the first ten months of the year is up 37%, with all segments recording growth. The fastest growing segment this year is luxury, up 70%, and the slowest is micro car, up just 13%. So why are the sales of most expensive cars soaring and the cheapest ones slumping?
Current Climate China's luxury car segment is booming from a fairly low base, with sales of around 10,000 units a month for a share of under 4% of the total passenger vehicle market. New models in the segment, such as the Toyota Crown, Mercedes-Benz E-class, Volvo S40 and Cadillac CTS have helped drive prices down and sales up. Also of note, many of these models would have been sold as imports before, but with local production they are now included in the wholesale figures. Also, the resurgence of the Audis, most notably the A4, has also helped push the segment up. This time last year, the A4's sales were down 48% through the first ten months, and the A6's were down 11%. So whilst the A4's 196% YTD growth this year looks impressive, it is only 56% up on 2004's figure. Micro car, sales are below the overall market performance. This can be attributed to two main factors: the lack of exciting new models and the falling prices of larger models. Last year, sales soared because of the popular Chery QQ. But there has been little on the way of new models in the segment this year. In fact, only the Chang'an Benben, was launched at the Beijing Motor Show recently. The falling prices of larger models also had a major effect. Prices in 2006 continued to fall in the larger vehicle segments as competition intensified. If the price is right, the big comfortable vehicles will always win over the Chinese consumer. So what for the future? Expect the bigger cars with smaller price tags to continue to sell well. Market Scenario Passenger vehicle sales grew 37% to 3.3 million units in October year to date. Sales dipped slightly from September, but this is following the trend recorded in the previous two years. Should the trends of the past remain in place, one should expect to see an upsurge in the market in the next two months.
Passenger Vehicle Imports Passenger vehicle imports surged to 52,675 units in Q3 2006, up 20% over the same period last year. A third of all imports originated from Germany, with a little under a third coming from Japan. Imports through the first three quarters of this year have already exceeded the total achieved throughout the whole of 2005.
Passenger Vehicle Exports Third quarter passenger vehicle exports almost doubled the average set in the first two quarters of the year. Exports to Russia jumped the most, with total exports to the country just falling shy of the amount sent to Belgium. China's leading export destination. Exports in the third quarter of this year alone exceeded the total recorded for the whole of last year.
Manufacturer Market Shares SGM continues leading the car makers with sales in excess of 320,000 units year to date in October, followed by SVW with 276,000 units. SVW is outpacing SGM in the growth ranks though, with sales up 47% compared to just 32% by SGM. The largest growth set so far this year is by Tianjin Toyota, with sales up 78%.
Brand Market Shares Holding 16% and 11% of the market respectively, VW and GM, remain the only two carmakers with shares above 10% in the Chinese passenger vehicle market. Honda, Hyundai and Chery each hold a share of 7%.
Product Watch Best Selling Models The Buick Excelle once again tops the best selling models table with volumes of 13,224 units in October, beating its main rivals the Elantra, Jetta and Charade. Through the first ten months of the year though, it is the Jetta, which is leading. The Charade appears to now be falling slightly below the pace, in fourth place.
Model Volume Movements Toyota's Camry overtook Ford's Focus to top the list of volume growers in October while Charade from FAW-TAlC and Santana from SVW posted the large declines. There were three manufacturers - Beijing Hyundai, SGM and SVW - which had models in both the growers and decliners lists.
Price Watch VW and Buick continue to drive the prices of the best selling models, the Jetta and Excelle respectively, in a bid to win the best selling model of the year accolade. Competition in the form of the Toyota Camry and Buick Lacrosse are causing Honda to drop the price of its Accord to maintain its segment leading position.
New Ventures Daihatsu - another new brand to hit the Chinese shores, to roll out small cars Toyota's subsidiary Daihatsu has formed a joint venture to produce small MPVs at FAW Group's plant in Jilin, in northeast China, in 2007, under the licensing accord between Toyota and Chinese automaker. The venture is expected to roll out 30,000 MPVs with 1.0-1.5 liter engines a year and sell them through FAW dealerships. Mazda2 production to start in 2007 Mazda Motor Corp plans to start to make a redesigned version of the Mazda2 compact car in China in 2007 to help double its sales over six years. Mazda is expected to start manufacturing the model in China and Japan at the some time. Mazda plans to open new factories in Nanjing in 2007 to make cars and engines with local partner Chongqing Changan Automobile Co. The Mazda2 is sold as the Demio in Japan. Hyundai sets up research center Beijing Hyundai Automotive Corp, a 50-50 joint venture between South Korea's Hyundai Motor Co maker and Beijing Automotive, is setting up a 510 million yuan (USD64.8 million) research center as it plans to roll out a concept car designed and developed for China by 2008. The construction of center is expected to be completed by 2008. The joint venture is also building a second plant in Beijing, which will raise total capacity to 600,000 units from the current 200,000 units by end 2008. Honda targets 10% share by 2010 Honda Motor Co is aiming to boost its Chinese car market share to at least 10% by 2010 from around 7.5% estimated for 2006. Honda has targeted soles of 350,000 cars in China this year, up 36% from 2005. Honda has three car plants in China whose combined capacity is 480,000 units a year. This can be raised to 720,000 units with further investment. Earlier, Honda imported the Acura RL and TL luxury models. SAIC to bring in Ssangyong SUV SAIC Motor Corp, the Chinese partner of General Motors Corp, plans to import the Kyron SUV to China to help boost its domestic soles. The Kyron will be the fifth model mode by SAIC's Ssangyong Motor Co unit to be sold in China. SAIC may build on assembly plant in China to manufacture Ssangyong vehicles. International Trade China eyes 10% of global trading China is eyeing USD 120 billion, or 10% of global automotive trading volume in the next 10 years, from the current 0.7%. The country exported USD10.9 billion worth of vehicles and ports in 2005, according to the Chinese Ministry of Commerce. Lost August, the ministry approved 160 vehicle and auto parts manufacturers as export-oriented enterprises. Cummins targets $2.5bn by 2010 The US-based engine maker Cummins Inc targets more than USD2.5 billion in annual soles in China by 2010 from USD 1 billion in 2005. The company plans to spend USD 100 million to develop research and manufacturing facilities in China. Cummins has already invested USD195 million in China. The company operates three engine joint ventures in the country with partners including Dongfeng Motor. Ford to double parts purchase Ford Motor Co, as part of its cost-cutting drive, is expected to double its purchase of China-made parts in 2006, from USD2.5 billion to USD3 billion. Last year, the US carmaker bought USD 1.6 billion to USD 1.7 billion worth of parts in China. Ford plans to ship the parts to plants in other Asian countries, Europe and the US. Besides Ford, Germany's DaimlerChrysler plans to increase the purchase of parts in China to more than USD840 million in 2008. Petronas in China engine venture Malaysian fuel firm Petronas is in a tieup with China's Nanjing Automobile Corp and Brilliant Culture Group to manufacture Petronas' EO1 engine for commercial use. Petronas plans to kick off the project by December 2006 and begin engine production in 2009, with a capacity of 100,000 units. Policy News Regulators mull new fuel rules The National Development and Reform Commission, China's top planning agency, is working on new automotive fuel efficiency regulations and considering setting fuel consumption limits for light commercial vehicles. The move came after the first fuel consumption test was conducted on more than 400 models found fuel consumption results of most models was higher than what the firms claimed by up to 30% on average, according to the agency. |
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