Automobile sales in the world’s largest car market, China, has shown mixed results in the first two months of the year. Though sales for the two month period rose 4.3%, February was a poor month for automakers as sales went down compared with a year ago. In 2014, carmakers sold more than 23 million cars – a decent rise of 7% over 2013. However, this was short of analyst expectation since the slowdown in the economy restricted auto sales growth. Will the weaker Chinese economy take a toll on auto sales this year too? Let’s take a look at what the first two months of the year suggest.
A quick glance at the numbers
According to the China Association Automobile Manufacturers (CAAM), sales in China for the month of February totalled 1.59 million units, plunging 0.2% compared with last year. However, popularity of the sport-utility vehicles (SUVs) and Minivans supported the sales and somewhat helped in compensating the otherwise dull demand. In the first two months, automakers sold a total of 3.43 million passenger cars that included sedans, SUVs and minivans, which is an increase 8.7% in comparison with the last year.
How have the automakers performed?
General Motors (GM, Financial) along with its joint ventures registered sales of 261,072 units in the month of February, a surge of 1.3% over last year. Buick sales plunged 0.1%, but that has a negligible impact. It was more than offset by strong Chevrolet sales. General Motors sold around 2.5% more Chevrolet cars by selling 47,521 units. Cadillac was the top performer during the month, witnessing a stunning sales increase of 36.1% to 5,959 units. Baojun sales also saw remarkable growth of 391.6% to 27,542 vehicles. Overall, the company’s sales growth was almost flat for the month. In contrast, General Motors January sales in China were down 2.4% against a year earlier.
Ford (F, Financial), comparatively a new player, should not be taken less seriously as the second largest American automaker has some real ambitious plans to expand in this market. It posted fantastic sales figures in the month of February by selling 79,384 vehicles, up 8.7% as compared with the last year. The sales of Ford Ecosport and Ford Mondeo climbed 34% to 6,057 units, and 2% to 7,944 units, respectively. A combination of these contributed to the growing success of this automaker in the budding Asian economy.
In contrast, Audi witnessed slower growth in the mainland relative to last year. Audi’s car sales growth reduced from 13% to 10.5%. On the other hand, Honda (HMC, Financial) had a tough month in the country. The Japanese automaker sales saw 7.6% decline as compared to the last year. Domestic peer Nissan (NSANY, Financial) too reported a sales decline of 2.4% for the month. The automaker sold 70,200 vehicles in China for the month of February. However, its saw strong sales growth of 22.2% in January.
While foreign automakers were struggling to sustain growth, domestic manufacturers in China posted sensational sales figures in comparison to last year. In the first two months, Geely Automobile Holdings Ltd recorded a sales surge of 77% and Great Wall Motor registered a 22% increase which was attributable to the strong sales of sedans and crossovers.
What to expect going forward?
According to CAAM, sales of both passenger and commercial vehicles are likely to climb 7% to 25.1 million units in the current year. Sensing the potential of the Chinese marker, Detroit automaker General Motors in collaboration with its Chinese joint ventures plans to expand its market in the country in a big way. It intends to invest $14 billion to add five assembly and two powerstrain plants.
Ford, too, has solid plans to expand its capacity in China and build new assembly plants to capitalize on the growth that the market offers. In the second half of last year the company launched the third assembly facility with the target to increase its manufacturing capacity by over 350,000 units.
The current slowdown in the Chinese economy may attract a bit of concern, however it still offers much higher growth prospects compared with the developed markets. So quite obviously, automakers including General Motors and Ford are strategizing to make the most of the occasion.
