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Customer LoginsNissan's Chinese sales grow 5.7% in May, Toyota's up 11.6%, Honda's increase 16.2%, Hyundai and Kia's plunge
South Korean brands continued to lose ground in vehicle sales in China in May amid political tensions between the two countries, while Japanese brands saw gains.
IHS Markit Perspective:
- Significance:Japanese automakers are beginning to report growth in sales in China during May, on the back of new refreshed models, as well as the expansion of segments such as pick-up trucks.
- Implications:Sales growth for some brands in China comes as others feel major declines as lower-tier cities help spur demand growth from first-time car buyers.
- Outlook:For the full year 2017, we continue to expect a slow growth rate for China's light-vehicle market of just 1.1%.
Japanese automakers are beginning to report strong growth in sales in China in May, as South Korean brands continued to lose ground in vehicle sales in China during May amid political tensions between the two countries.
Nissan has, in a statement sent directly to IHS Markit, stated that its total sales in May have reached 112,085 units in China, marking an increase 5.7% year on year (y/y) on 92,377 units in the same month last year. These include sales of Nissan imported vehicles as well as those made in China in joint ventures (JVs) on commercial vehicles (CVs) and passenger vehicles (PVs). On a year-to-date (YTD) basis, Nissan sales in China have reached 531,756 units in May, an increase of 6.2% y/y.
As part of Nissan's total sales, the company's passenger vehicle JV in China with Dongfeng Motor has reported sales of 92,377 units in May, marking a 4.7% y/y increase. On a YTD basis, Dongfeng Nissan Passenger Vehicle Company has reported sales of 442,757 units, up 6.3% y/y.
Meanwhile, Nissan's JV on light commercial vehicle (LCV) production in China, Dongfeng Automobile Commercial Vehicle (DFAC) Company, has reported sales growth of 12% y/y in May, while on a YTD basis, sales are up 32.3% y/y.
"Besides the strong line-up of sedans like the Teana and Sylphy, we are happy to see the continued and robust growth of our SUV products - from the Nissan Qashqai, X-Trail and Murano to Venucia's T70 and T90," said Jun Seki, senior vice-president of Nissan and chairman of the Nissan China Management Committee. "The upcoming start of Nissan Navara pick-up and Nissan Kicks sales will further reinforce our competitiveness in those segments. Additionally, the good growth of the DFAC and Venucia businesses is resulting from our strategic initiatives to grow and become more competitive in the LCV and local brand segments, so we are pleased with the current progress."
Toyota, in a statement sent directly to IHS Markit, has stated that its sales in China in May hit 112,800 units, marking an increase of 9.6% y/y. On a YTD basis, Toyota has sold 517,000 units, up 4.5% y/y.
Toyota, which has two JVs in China, has reported sales of its FAW-Toyota joint venture have reached 66,700 units in May, up 10.1% y/y, while in the YTD they were 288,100 units, up 5.7% y/y. Meanwhile, the Japanese automaker's Guangzhou Toyota JV has sold 35,800 units in May, down 3% y/y, and 175,300 units in the YTD, down 3.9% y/y.
Honda has reported total sales in China in May of 115,584 units, an increase of 16.2% y/y. On a YTD basis, Honda sales in China have reached 530,398 units, up 19% y/y from 445,840 units in the same five-month period last year.
Of these, the Guangzhou Honda JV has sold a total of 57,142 units in May, up 7.1% y/y, and 276,075 units in the YTD, up 13% y/y. The Dongfeng Honda JV has sold a total of 58,442 units in May, up 26.7% y/y, and 254,323 units in the YTD, up 26.2% y/y.
The strong growth in Honda's passenger vehicle JVs comes from the new Honda Civic of Dongfeng Honda, which witnessed sales rising by 131.5% y/y in May to 13,478 units, up from just 5,821 units in the same month of 2016, and on a YTD basis, the Civic's sales have reached 66,869 units, up 244.3% y/y from just 19,422 units in the same five-month period last year. At Guangzhou Honda, the top growth model is the Honda Accord sedan with sales rising 20.5% y/y in May, and up by 69.6% y/y in the YTD.
Acura, the premium brand of Honda, has also reported solid growth with sales in May of 1,565 units, up from just 214 units in the same month last year, while on a YTD basis sales have reached 5,394 units, up from just 978 sold in the same five-month period in 2016.
However, despite the Japanese brands in China reporting strong sales growth, this is coming as the South Korean brands in China are continuing to report a major drop in sales in the country.
Hyundai and Kia's sales in China in May have plummeted 65.1% y/y, according to date released by the Yonhap News Agency. The combined sales of the two affiliated brands under the Hyundai Motor Group have reach a total of 52,485 units in the month. Of these, Hyundai sales have hit 35,100 units, down 65% y/y, while Kia's sales have hit just 17,385 units, down 65.3% y/y. On a YTD basis, the sales of Hyundai and Kia models have reached 376,895 units, down 43 % y/y.
Outlook and implications
The current political issue ongoing between China and South Korea has significantly hurt the sales of South Korean products in China as local consumers boycott products from that country to show their solidarity with their government's stance against South Korea. The issues between the countries have risen due to the South Korean government agreeing to house the Terminal High Altitude Area Defence System (THAAD), which the United States government says is imperative for addressing the growing threat from North Korea. However, the presence of THAAD is now coming at a huge price for South Korean businesses in China. The Chinese government opposes the presence of THAAD, stating that it potentially impinges on the internal security of China as the powerful radar systems could be turned to spy on China.
The situation highlights a parallel between what Japanese companies went through when the Chinese and Japanese governments disagreed on certain political issues in 2012. This related to the Diaoyu Islands and was reflected in a fast and significant decline in Japanese brand sales in China as local consumers boycotted Japan's products. Japanese brands then went on a significant brand marketing exercise in China to show their commitment to the local consumer base, while the rhetoric between the two governments was toned down following the disastrous effect on trade between the two countries.
The Chinese provinces most affected in 2012 were Beijing and Zhejiang, although Japanese brands' sales slipped in all the 10 largest provinces. The two provinces where South Korean brands' sales are now suffering most are again Beijing and Zhejiang. Chinese consumers respond quickly to media reports and political disputes with other countries, almost immediately denting sales of products from those markets in China. Patriotic feeling trumps loyalty to automotive brands in China. Hyundai and Kia and their suppliers are increasingly concerned that tensions over THAAD could escalate, forcing Hyundai to again postpone its plans to open a production base in Chongqing. Hyundai still currently aims to begin production there later this year for passenger vehicles. However, already the automaker has had to reduce its Chinese output amid plummeting sales.
In the meantime, other brands are gaining from the lost market share of the South Korean brands in China, with Japanese brands reporting considerable growth despite the overall slower growth rates in the Chinese vehicle market this year. Meanwhile, growth in China is also being achieved by automakers who have brought in refreshed models, as well as expanding their line-ups to include pick-up trucks.
For full-year 2017 sales, we currently forecast 1.1% y/y growth, with light vehicle (LV) sales expected to reach just 27.86 million units in China. Of these, the PV segment is expected to witness a 2.6% y/y increase to 23.65 million units, while LCV sales are expected to decline 6.5% y/y to 4.22 million units.
About this Article
The above article is from AutoIntelligence Daily by IHS Markit. AutoIntelligence Daily provides same-day analysis of automotive news, events and trends. Get a free trial.