China car sales below projections, with domestic manufacturers slipping
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A hazy outlook for China's auto industry Image: Jonathan Kos-Read |
Although the days of 30-40% hyper-growth may be over, China’s auto market showed strong growth in 2013, up 14% to 22 million vehicles. 2014 looks set to be another good year for automakers.
Auto consultancies like LMC Automotive and CAAM believe growth is likely to reach somewhere between 8-10% in 2014; Hubertus Troska, head of Daimler AG’s Greater China operations, told reporters that China was the “one place to be” for anyone in the auto industry.
KPMG also expects China to account for one third of new auto sales worldwide by 2020.
China’s vehicle fleet, which now stands at some 137 million vehicles, according to the Ministry of Public Security, is now 5.7 times larger than it was a decade earlier and is expanding rapidly on the growth of demand for passenger vehicles.
Foreign carmakers, especially those producing high-end autos or SUVs, enjoyed impressive sales last year. Ford sales grew 62% from 2012 levels to 679,000 units.
Nonetheless, 2014 started slowly for the nation’s passenger car industry, with sales rising just 7%, missing analysts’ forecasts. The slowdown is the weakest growth since February 2013, falling short of the 1.9 million-unit estimate.
Despite the slowdown foreign automakers continued to thrive. Ford reported deliveries surging 53% to 94,466 units; GM saw deliveries climb 12%; while at Toyota and Honda deliveries rose 18% and 34%, respectively.
However, the outlook for domestic brands is less positive. Exports are down and China’s homegrown manufacturers are losing market share to foreign rivals.
Despite a 15.7% rise in Chinese passenger car sales to 7.2 million units in 2013, January sales were down 5.1% year-on-year to just 709,400 units. During the same period, domestic auto brands’ share of total sales also slid by 12.8%.
Some domestic brands fared better than others, however. Great Wall saw a substantial rise in SUV sales, while FAW Also saw sales of passenger cars increase 68.2% year-on-year to 128,900 units. Chery came low in many industry rankings, with passenger car sales dropping by 18.8% last year.
According to CAAM, Chinese brands could be “killed in the cradle” if the government allows foreign automakers to become more independent from their domestic partners. The statement was in response to a Chinese commerce ministry official who claimed that domestic automakers should prepare for the day when limits on foreign automakers’ stakes in Chinese JVs are relaxed.