China car sales analysis First Half 2017

China-car-sales-graph-H1_2017In the first six months of 2017, Chinese car sales are up just 3% to 10,93 million. If the market maintains this growth rate, it will become the lowest increase in more than 13 years and possibly in more than 25 years. And there’s reason to believe it will come to that scenario, if you look at the sales curve in the second half of 2016, with increasing sales in the last quarter due to a pending increase in sales tax on cars with engines smaller than 1,6 liters, from 5% to 7,5%. Then again, that same tax will rise again in 2018 to 10%, so sales may show a similar curve in Q4 of 2017 as consumers pull forward their buying decisions to benefit from the lower tax. Back to the first half of 2017, in which crossovers and SUVs gained 14,9% to 4,41 million sales, while sedan sales were down 2,5% to 5,42 million and MPV sales slumped 9,4% to 1,09 million. Of these 10,9 million total passenger car sales, 42,3% came from domestic brands and 57,7% from import brands, compared to a ratio of 41,3% vs. 58,7% in all of 2016, as sales of foreign brand vehicles have slightly dipped while sales of local brands have continued to rise, especially thanks to the introduction of a range of afFordable crossovers by almost every single brand.

Auto-sales-statistics-China-Honda_URV-SUVBut that doesn’t paint the complete picture, as European brand sales have remained virtually stable at +0,85% and US brand sales have improved only slightly better than the overall market at +3,86%. The big shift has taken place between Japanese brands and South-Korean brands, as the former are finally starting to recover from their troubles during a diplomatic spat between China and Japan in 2012 over a few islands in the East China Sea, even though only Honda and Mitsubishi have returned to the market share they held in 2011. Still, Japanese brands have grown at a pace of +16,36%, double the gains of the domestic brands, while Korean brands were the only nation to lose volume at a terrifying -46,7%. The reason for that demise has been explained in our monthly reports for the last four months, but there’s another underlying reason which has been going on for a longer period. The South-Korean brands never achieved the kind of mainstream status in China as they did in Europe or North America. They remained a low-cost, low quality option for customers who wanted an import-brand vehicle without having to pay the premium for an actual established brand from Europe, the US or Japan. When the domestic brands started to improve their quality and subsequently their brand image, and also started launching a huge number of afFordable crossovers to satisfy the demand for this type of vehicle, the Koreans were left behind as customers proved less brand loyal than expected. Especially Hyundai has been left behind in this race as its partner Beijing Automotive keeps on expanding the brand’s sedan range to no less than 9 models of different generations sold alongside each other with a 10th nameplate coming up, compared to just 4 crossovers. When recovering from the anti South-Korean sentiment, both brands need to be quick to launch afFordable crossovers to the Chinese market or risk facing reduced market shares for years to come.

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China car sales analysis June 2017

China-car-sales-graph-June_2017After two months of small declines, the Chinese car market returns to a modest growth with sales up 3,2% to just under 1,79 million units. However, there have been reports that the June sales figures are artificially boosted by heavy discounts as 2017 sales threatened to lag behind 2016. Again, crossovers and SUVs are the only type of vehicle to improve year-over-year, with a 16% increase to 741.400 sales. Meanwhile, sedan sales were down 4,3% to 883.000 and MPV sales dropped 3,7% to 163.700 units. Within those sales figures, electric cars and PHEVs also showed a nice improvement of 33% in June to 59.000 units, of which 48.000 EVs and 11.000 PHEVs. For the first six months, sales of New Energy Vehicles totaled 195.000 (160.000 EV and 35.000 PHEV), an improvement of 14% due to a slow first quarter when the government reduced tax incentives on this type of vehicle. New Energy Vehicle sales represented less than 1,5 percent of China’s total new-vehicle volume in the first six months, but the Beijing government holds on to its target of 6,7% in 2020 and as much as 20% by 2025, helped by a carbon credit scheme that will be imposed in 2018.

The Seasonally Adjusted Annualized selling Rate in June stood at 23,2 million, up from the last two months and the third-highest figure of the year so far. The share of domestic automakers was similar to that of May at 40% as all the growth in the market came from domestic brands while sales of import brand cars were stable. Year-to-date, the share of domestic brands now stands at 42,25%. First half car sales in China now total just over 10,9 million units, an increase of 3% on the first half of 2016. However, average transaction prices dropped 4% over the first half of 2017.

 

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European car sales analysis May 2017 – models

Dacia_Sandero_Stepway-2017-European-car-salesAfter looking at the May 2017 car brand ranking in Europe, let’s discuss sales figures of individual models. The first thing to notice is that the market leader Volkswagen Golf scores its first single-digit loss since last January, after 3 months with double digit losses of which April was the worst with a decline of 28,3% (or almost 14.000 sales less than April 2016), although it must have hurt more that the Golf was outsold by the Ford Fiesta in March. The facelifted version is now fully available and VW’s compact hatchback (and station wagon) can continue its dominance of the European car sales charts. In May its smaller sibling Polo was in 2nd place, just ahead of the Renault Clio, both above 30.000 sales for the second time this year. The Polo will be facelifted later this year, the Clio has just been freshened. Meanwhile, the new generation Fiesta is just entering dealerships across Europe and should start to make an impact later this year. For now the Fiesta is stuck in 4th place, ahead of the Opel/Vauxhall Corsa, the biggest loser in the top-10 at -8,2%.… Continue Reading …

European car sales analysis May 2017 – brands

European-car-sales-graph-May_2017European car sales returned to growth in May after a one-month hiatus because of a late Easter. In May 2017, just over 1,4 million cars were sold in the European Union and EFTA, an increase of 7,4% on last year. This brings the year-to-date tally to 6,85 million sales, up 4,7% on the first five months of 2016. Of the five largest countries, four outgrew the market while the UK recorded its third consecutive monthly decline at -8,5%. In contrast, Germany (+12,9%) and Spain (+11,2%) showed double digit growth and France (+8,9%) and Italy (+8,2%) also improved with impressive figures. Besides the UK, only Ireland (-7,9%) and Greece (down a horrid 20,9% in May but still in positive YTD) declined, while Croatia was the biggest gainer (+34,1%), followed by Hungary (+28,6%) and Romania (+27,1).

 

If Volkswagen Group was the big volume loser in April with a loss of more thsn 28.000 sales, in May the company rebounds with an increase of over 25.000 sales, almost as much as the #2 and #3 fastest growing manufacturers combined, Renault-Nissan and Daimler AG. On the other end of the scale, Honda, Tata Motors with its Jaguar and Land-Rover brands and Mazda lose the most volume, although Honda is the only manufacturer to lose more than 1.000 sales year-on-year.… Continue Reading …

MG to expand to mainland Europe, what does it need to become successful?

Auto-sales-statistics-China-MG_ZS-SUVAfter almost 10 years of UK-only sales, SAIC MG is ready to start exports of its cars from China to other countries in Europe as well. Recently, Shanghai Automotive Industry Corporation (SAIC) has successfully launched a few crossovers in the domestic market (Roewe RX5, MG ZS), which puts its two passenger car brands among the fastest growing brands in China at the moment. This would be a great moment to expand its footprint to new markets as it can launch there with fresh product, and more importantly: the right product. MG is the designated export brand for passenger cars from SAIC, whereas Roewe is and will remain a China-only brand and Maxus is the LCV brand of the company. MG is already available in a number of countries in the Asia-Pacific, South America and Africa regions, and since 2009 in the UK where it reached a peak of just under 4.200 sales last year. With its expansion into continental Europe, the brand is looking to become the first Chinese brand to successfully enter a mature market, but a number of other players have set similar goals, among others Geely with its newly launched Lynk & Co brand and the resurrected Borgward brand, which both also have concrete plans to enter the European car market.… Continue Reading …

Ford to switch US Focus production to China instead of Mexico

Donald_Trump-Mark_Fields-FordFord has announced that the next generation Focus sedan will be imported from China, now that other automakers have proven there’s little public backslash nor customer hesitation over quality from cars produced in China. Buick already imports the Enclave from China, Cadillac will follow with the CT6 PHEV and Volvo sells the Chinese made S60L in the US and S90 in Europe. So not a lot of breaking news there, except that the Focus will be the highest volume model so far that will be shipped from China to the US. The big story about this announcement is Ford’s decision to pick China instead of Mexico as the new production base for the Focus. Ford originally planned to move Focus production to a new $1.6 billion plant in San Luis Potosi, Mexico. Those plans were canceled in January, less than a year after announcing them, under public pressure from then-president-elect Donald Trump. Trump singled out Ford for its decision to move production from Michigan to Mexico, which he claimed would cost US jobs. Then-Ford-CEO Mark Fields called Bullshit on Trump as the Focus would make room for production of the Bronco SUV and Ranger midsize pickup at Ford’s Michigan Assembly Plant in 2018, and no US jobs would be lost as a result of this move, but it was too little too late against the media-savvy populist who never let truth get in the way of headline-grabbing claims.

Eager not to let Trump take any credit for the decision not to invest in extra capacity in Mexico, Ford cited cost savings of $500 million as the reason to change its mind and build the next gen Focus at its existing plant in Hermosillo, Mexico instead of investing in the new plant in San Luis Potosi. Now there’s a new CEO at the helm at Ford and plans have changed again: Mexican production is off the table altogether. Again, cost savings of another $500 million are quoted as the reason for the shift of production across the Pacific. These plans were already in the making under Mark Fields, but it was the new boss Jim Hackett who eventually pulled the trigger.… Continue Reading …

China car sales analysis May 2017

China-car-sales-graph-may-2017Car sales in China seem to have stalled after years of double digit growth. The main culprit for the slowdown has been mentioned on these pages before: the government has artificially boosted demand for cars with small engines since the 3rd quarter of 2015 when the market threatened to sink into the red due to a collapsing stock market and reduced customer confidence. That tax break has worked perfectly in pulling forward car purchases in Q4 of 2015 and in 2016 but it was cut in half by the beginning of 2017 and has since affected the Chinese car market in a negative way. Sales of vehicles with engines of 1,6 liters or less fell 9% to 1.15 million last month. In Q1, total market sales were still up by 5,7% but two months of declines have brought the year-to-date tally to 9,25 million, up just 2,7% on the first 5 months of 2016. A 2,2% loss in April was a first warning sign and now in May sales are down by another 2,1% to 1,71 million units. The Seasonally Adjusted Annualized selling Rate rebounded to 22,2 million, still the second lowest figure in the past 12 months. SUVs and crossovers continued to fuel the market with sales up 13% to 715.000 units in May, but this could not offset declines in deliveries of sedans (-9,3% to 839.000 sales) and MPVs (-17% to 150.000). The share of domestic automakers was the lowest since last August at 40,3% and it has fallen hard since its peak of 47,1% in February. However, compared to May 2016, the domestic brands have increased their sales 3% while the foreign brands saw their volume shrink by 5,5%.  Year-to-date, the domestic share is now 43,4%.

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European car sales analysis April 2017 – models

Volkswagen_Tiguan-European-sales-figuresAfter discussing the April 2017 European car brand sales ranking, let’s take a closer look at which individual models are helping their brand succeed or fail. After the freak event in March, when the Volkswagen Golf was not the best selling car in Europe, things have returned to normal in April, although the Golf is still the biggest loser by far in the top-25 wiht a loss of more than 28% on last year. The Golf lost more sales from April 2016 to April 2017 than its rival Renault Megane sold last month (Golf: -13.831 units). And while the Golf no longer sells double the volume of its nearest competitor, it still has a gap of almost 10.000 sales to the #2, as the entire top-3 is down. One culprit for the Golf’s demise is obvious in 4th place: the success of the Volkswagen Tiguan, up 70% to equal its highest ranking ever. Last month’s leader Ford Fiesta is down to 7th place as it’s payback time for its dependence on the UK market, which was exceptionally strong in March, but exceptionally weak in April. The same can be said of the Opel/Vauxhall Corsa, down 15% into 8th place. We welcome the Citroën C3 into the top-10 for the first time ever, as it even threatens to outsell its recently acquired stablemate Corsa. The Skoda Octavia is back into the top-10 which means there’s only one crossover in the top-10, as the Nissan Qashqai and Renault Captur are both just outside. The Captur is down 14% but remains ahead of its rivals Peugeot 2008 (#14) and Opel/Vauxhall Mokka X (#25), which are both down by single digits as competition in the segment has intensified by the arrival of new players.… Continue Reading …

European car sales analysis April 2017 – brands

European-car-sales-graph-April_2017The European car market declined by 7% in April 2017 as a collapsing UK market exacerbated a general slowdown across the continent which was caused by having fewer selling days than in 2016 due to a late Easter. Still, the almost  1,22 million cars sold in April is still slightly better than the same month in 2015. As mentioned, the biggest culprit of the decline is the British market, which declined by almost 20% on last year as the result of an increase in the Vehicle Excise Duty tax which came in effect on April 1st in the UK. Another part of the explanation for the plummeting sales is that Easter fell in April this year instead of in March, which means dealers had fewer selling days in 2017. Combined sales of March and April are still up by 2,9% on 2016. The UK market is expected to stabilize as the year proceeds, as the effect of the tax raise will wither away. The Year-to-date figure now stands at 5,44 million units, an increase of 4% on the first four months of 2016.

Of the big markets, only the Spanish market grew in April (+1,1%), as the UK posted a double-digit drop (-19,8%) and Germany (-8%), France (-6%) and Italy (-4,6%) also lost volume. This was balanced by positive contributions from the so-called EU-12 countries (+8.2%), the member states that have joined the EU since 2004. The fastest growing market was Croatia (+29,6%), while Ireland was the biggest loser at -24,5%.… Continue Reading …

Global car sales analysis 2017-Q1

In the first quarter of 2017, worldwide sales of passenger cars and light commercial vehicles increased almost 5%, according to JATO Dynamics figures, based on their data of 52 markets. Almost a million additional vehicle sales (+962.000) compared to the first quarter of 2016 make for a new total of 21,24 million global sales. Disclaimer: this total excludes some major markets like Iran, the Middle East, Magreb, Pakistan, Philippines and a few South American countries. Still, this should give a reasonably accurate picture of the global car market this year.

Worldwide-car-sales-by-manufacturer-2017-Q1In terms of manufacturers, Renault-Nissan is the big winner at the top, entering the top-3 thanks to a 10,4% increase and reaching within a spitting distance (just 1.500 units) of Toyota (+7,8%). Keep in mind that Renault is relatively strong in Iran and the Magreb countries, while Toyota is dominant in the Middle East and Philippines, so even accounting for those markets the gap between the two companies will be small. Volkswagen still leads despite growing slower than the industry at just +1,7%. GM is down to fourth due to the sale of its European unit Opel/Vauxhall to PSA.… Continue Reading …