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Customer LoginsChinese passenger vehicle production grows 31% y/y in July, sales up 26% − CAAM
The CAAM released its production figures for China this week. An initial analysis of the CAAM data by IHS Automotive analysts is included below. This does not include IHS Automotive forecast figures. China's passenger vehicle production increased 31% year on year (y/y) in July, while sales rose 26% y/y. Chinese brands witnessed the highest sales growth in the SUV segment, not the sedan segment.
IHS Automotive perspective
- Significance: The Chinese market has witnessed strong growth in July, as sales of SUVs grew 47% y/y, while sedan sales also rose by almost 20% y/y.
- Implications: China's vehicle market is expected to witness a slowdown in the sales growth of Chinese brands as greater competition comes from international players.
- Outlook: The Chinese market has witnessed strong growth in July on the back of a low base month of comparison from the same month last year.
The automotive market in China continued to grow in July, with a total 1,959,000 units produced in the month, marking a 28.9% year-on-year (y/y) increase. Meanwhile, vehicle sales were up 23.03% y/y to a total of 1,851,900 units in July, according to wholesale data reported by the China Association of Automobile Manufacturers (CAAM). The market's strong double-digit growth rates come mainly from strong sales in the passenger vehicle (PV) segment, although the commercial vehicle (CV) segment has also begun to show growth.
Local production of PVs grew 31.83% y/y to 1,718,500 units in China in July, while sales of PVs hit 1,604,500 units in July, marking an increase of 26.02% y/y. The CV market witnessed monthly production of 241,100 units, up 11.28% y/y, and sales of 247,400 units, up 26.26% y/y.
On a year-to-date (YTD) basis, the Chinese market witnessed total production growth of 8.99% y/y, while total sales were up 9.84% y/y to 14,683,900 units. Of these, sales of PVs were 12,646,800 units in the seven-month period, an increase of 11.13% y/y, while CV sales were up 2.41% y/y to 2,037,100 units.
PV segment
The PV segment, as defined by the CAAM, includes sedans, sport utility vehicles (SUVs), multi-purpose vehicles (MPVs), and crossovers (minibuses and large minivans). The PV market witnessed total sales of 1.6 million units in July, a 10.06% month-on-month (m/m) decline, which compares with the rise of 26.02% y/y.
The sedan segment in July saw sales of 824,900 units, marking an increase of 19.57% y/y. The SUV segment saw sales of 580,700 units in July, up 47.36% y/y, while MPV sales were up 36.41% y/y to 153,600 units. However, the problem area for the PV segment is crossover vehicles, sales of which were 45,400 units in July, down 38.94% y/y.
On a YTD basis, the PV segment witnessed sales of 12,646,800 million units in July, up 11.13% y/y. Of these, sedan sales were 6,387,100 million units, down 1.51% y/y. Sales of SUVs were 4,437,200 units, up 44.86% y/y, while MPV sales were up 19.89% y/y to 1,353,400 units. However, YTD sales in the crossover segment were down 33.27% y/y to 469,200 units in the seven-month period.
Outlook and implications
The vehicle market in China continues to gain from the ongoing 50% cut in the new car purchase tax for vehicles fitted with 1.6-litre or smaller engines. In July, around 71.3% of the PV market's sales were of vehicles fitted with engines of 1.6 litres or smaller. The cut in new car purchase tax was introduced in 2015 after a disastrous summer when the government worried that new-car sales would continue to drop and it was forced to introduce a quick-fix remedy for the market. This stimulus measure, which had also been used previously, continues to benefit the PV market in China and is expected to be in place until end of the year. In addition, the double-digit percentage y/y increase in PV sales in July is also the result of being in comparison to a month last year when PV sales actually declined. In July 2015, the market in China suffered with a decline in the PV segment of 6.6% y/y.
Brand analysis
The Chinese market has also been growing on the back of new models introduced, which offer domestic consumers greater choice at an affordable price point − and this has mainly been by Chinese brands, which have introduced a number of new SUVs in the domestic market.
Overall, Chinese brands accounted for PV sales of 633,600 units in July, thereby accounting for 39.49% of China's PV segment. This was a substantial increase for Chinese brands, which saw combined PV volume sales rise 27.64% y/y. German brands followed with sales of 318,300 units in China in July, followed by Japanese brands, which sold 289,900 units, while US brands sold 210,200 units and South Korean brands sold 111,000 units. It is important to note that the CAAM data refer only to locally produced models and so do not include imports.
However, the story is not the same within the different PV segments. Chinese brands' market share in the sedan segment, for instance, was just 17.3%, or volume sales of 142,000 units in July. In the SUV segment, however, Chinese brands now rule with their combined sales accounting for 54.1% of the segment or 314,000 units, while in the MPV segment their combined sales accounted for 85.6% of the segment or 131,000 units.
On a YTD basis, the total sales of Chinese brands in the PV segment were 5,368,000 units, or 42.5% of the segment. Of these, in the sedan segment Chinese brands accounted for sales of 1,198,000 units, or just 18.8% of the segment, while in the SUV segment they accounted for 56% or volume sales of 2,485,000 units.
However, Chinese brands are not likely to continue to see such rampant growth as international brands begin to bring in more cheaply priced SUVs to win over Chinese consumers. The international brands are also strengthening their sedan offerings, bringing in higher-specification and new models, fitted with smaller engines to win over local buyers.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.