China car sales analysis October 2016

The Chinese car market shows no sign of slowing down, even though a slowdown of the growth curve keeps being predicted by critics. October 2016 is the fourth consecutive month of more than 20% year-over-year growth with sales up 21% to 2,3 million sales. That means volume has more than doubled on the same month just four years ago and this month is the second-best ever after tax-break fueled December 2015. This reduction of sales tax on vehicles with engines of 1,6 liters or less from 10% to 5% has boosted sales of qualified vehicles since its introduction in Q4 of 2015. In the first ten months of the year, those vehicles accounted for 72% of sales, up 4,1 percentage points from a year earlier. This tax break had been expected to be cut by the end of 2016, pulling forward the buying decision for buyers interested in such vehicles. However, it’s become likely the program will be extended into 2017, which may influence sales figures in the last two months of the year. Still, even a 15% drop in sales in November and December would keep 2016 in double digit growth compared to last year, and the year-to-date figure of almost 18,5 million sales (+15%) is already above the 2014 full-year figure with two months to spare.

The Seasonally Adjusted Annualized Selling Rate again hit a new record in October at 26,18 million units. Sales of crossovers and SUVs shot up 43% to 896.000 units, while deliveries of MPVs surged 20% to 231.800 and sedan sales increased just 10% to 1,17 million. The share of local brands is up to a record 44,35%, crushing last February’s figure of 43,63%. That pulls the year-to-date ratio of domestic brands above 40,5% again, compared to just 37,66% over the full year 2015.Local manufacturers are launching new affordable crossovers at lightning speed, and consumers are scooping them up like chocolate ice cream. The #2 best selling vehicle in China and the best selling crossover Haval H6 already breaks its monthly volume record set just last month to 56.667 sales, up 50,9% on last year, and exactly the same goes for the GAC Trumpchi GS4 in 7th place with sales up 62,5%, the Buick Envision in 10th place with sales up 86,7% and the Haval H2 in 21st place with sales up 25,6%. The Roewe RX5, launched in July, breaks through the 20.000 sales for the first time and cuts its September ranking in half, from 44th to #22, making it the best selling newcomer this month, ahead of the Geely Boyue crossover and Chery Arrizo 5 sedan, also both breaking their volume records this month. The BYD Song crossover, launched just over a year ago with only petrol engines followed by a plug-in hybrid version early this year, has suddenly seen the light: after selling an average of 5.000 units a month for the first 8 months of the year, topping out at 6.500 in January, September volume jumped past the 10.000 sales and in October the Song sold more than 15.500 copies.

Among recent introductions, the Chevrolet Cavalier is up to #49 and already the #2 for the brand with almost 14.000 sales, ahead of the Cruze. Its domestic rival Geely Emgrand GL is up to #110 with 7.000 sales. Chery’s new flagship crossover Tiggo 7 is one place ahead, while the all-new SWM brand is stable on its first month with just over 6.000 sales of the X7 crossover (#123). The Baojun 310 is up to #56 with 11.800 sales, an impressive performance for a small hatchback, a segment so far not very popular in China. Its bargain-basement price undoubtedly helps of course. The Mitsubishi Outlander improves to #179 with 3.617 sales, but that puts it still behind the Renault Kadjar in 166th place, for the first time above 4.000 sales since the launch of local production for the French brand in March. The Jaguar XFL is stable at just below 1.300 sales at #258 while the Citroën C6 volume is actually down on its introduction month, with 417 sales in 335th place.

European brands

For only the fourth time this year, Volkswagen outperforms the market, with a 26% increase in sales even despite still missing out on the crossover boom. Still, its sedans Bora, Jetta, Lavida and Santana each add at least 10.000 units of volume on last year, which translates to record sales for both the Lavida and Santana. The Golf and Gran Lavida hatchbacks were the only VW models to lose volume year-over-year. Sister brand Skoda extended its double-digit winning streak to 6 months with another 36% increase as all of its models except the Yeti crossover did better than last year. At Audi, the news is less positive, with the second consecutive monthly loss for locally produced models, and a mere 0,6% increase in total sales including imported models. That compares weakly to BMW‘s +10,4% for locally produced models and Mercedes-Benz‘s +37% for locally produced models and +28% in total sales.

As mentioned above, Renault sales of the Kadjar crossover are finally picking up pace, growing from 1.700 in August to 3.000 in September and 4.000 in October. This is in sharp contrast with the fate of PSA, as Citroën is losing market share at lightning pace with sales down 28,7% in October when the C4 sedan was the only model to improve sales, and that’s only because it was in its introduction month last year. This makes it eight montly losses in ten months and the third consecutive double digit loss, for a year-to-date loss of 16,5% in a market up 15%. Sister brand Peugeot hasn’t had a single positive month this year and is down 18,3% YTD, but at least it narrowed its loss to -7,4% in October as the 308 sedan broke through the 10.000 sales for the third time ever and the first time since March 2015. The brand also introduced an eagerly awaited new crossover with the 4008, also known as the new 3008 in Europe, but China will keep the previous generation 3008 alongside the new one. DS racked up only its second gain of the year, with 1.354 sales, up 1,5% on 2015, which was down 55% on 2014. At least it does better than Fiat, which I hardly mention here because the brand is quickly rendering itself irrelevant in China. The Italian brand “celebrates” a fourth consecutive month of volume losses of more than 70% to just 625 sales in October.

American brands

General Motors is the #2 automaker in China after Volkswagen, and two out of its three brands in China have been clearly outperforming the market this year. Chevrolet is the odd one out with sales down 19,5% so far this year, leading to a market share loss of almost a full percentage point, but its fate may have turned in October. Sales were up 3%, the second time this year the brand was in the black, and it has a lot to do with the launch of the Cavalier low-cost sedan. In only its second month, it’s already the 2nd best selling model of the brand ahead of the Cruze, the model who’s previous generation formed the basis of the lower-priced Cavalier, in a similar way the Ford Escort has outsold the Focus since this year. Sales at GM’s biggest brand in China, Buick, have been steaming hot for the past twelve months thanks to the increasing popularity of the Envision crossover and the introduction of the Verano sedan last year. For the past two months, although still showing double digit growth, Buick has lost market share as the brand appears to have finally ended production of the formerly best selling car in China: the venerable Excelle. GM’s luxury brand Cadillac is on fire in China after a few recent product launches, most notably the XT5 crossover, now the brand’s best selling model. But also the brand’s existing sedans have improved this month and Cadillac has now set a new sales record in China for the third consecutive month as sales have tripled year-over-year in October, to 13.500 sales.

After three months of big double digit gains, Ford loses market share again in October with sales up just 9,5%, even though the Escort delivers a record volume, breaking 30.000 sales for the first time since its launch. The Ford Edge SUV also stays solid, but the Mondeo sedan drops more than half of its volume. Newcomer to local production Jeep drops slightly on September but still hits a second-best month ever for its two models. With local production of the new generation Compass also planned for China, the brand is up for great things to come.

Japanese brands

After ranking #2 overall brand for locally produced models in China last month, Honda is back into the 4th place it also holds year-to-date, behind VW, Changan and Buick. With sales up 24,7%, Honda remains the fastest growing of the three large Japanese brands, and it has launched no less than 2 all-new models this month to defend its position. We’ll discuss those models in a separate post, as usual. Nissan is close behind with sales up 19,7% mostly thanks to the Qashqai but also to the Sylphy which tops 40.000 units for the first time this year and only the second time ever. Both Honda and Nissan top 100.000 sales in October, but Toyota barely edges past 80.000 with sales down 17,7% as all of its sedan models lose volume except for the Yaris subcompact and its best selling model Corolla takes a 32% hit.

Of the smaller Japanese brands, Mazda has been on a roll recently, with its third consecutive month of increases greater than 40%. The new China-only CX-4 is responsible for 68% of the brand’s growth, but also the CX-5, Mazda3 Axela and the Mazda6 Atenza improve, showing the growth is shared across the line-up. After a year-long losing streak that couldn’t seem to come to an end, Mitsubishi has turned its fate around with the introduction of the locally produced Outlander crossover, already the brand’s best seller in its second month on the market. Sales are up an impressive 75% for the month but still down 22,7% year-to-date. If the brand keeps this momentum going, it may end the year in the black, though. This outcome is increasingly unlikely for Suzuki, down 32,6% in October and -18,5% YTD

South-Korean brands

Mixed fortunes for the South-Korean sister brands, with Hyundai down 10% as its #2 best seller of last year, the subcompact Verna is being renewed. Both the previous generation and the new Verna Yuena will remain on sale next to each other, but in the introduction month of the Yuena, combined sales of the two generations are down by more than a third. YTD sales of Hyundai are still up 5,4%. After a depressed start of the year, Kia recovers quickly with its fifth consecutive month of double-digit growth, up 23,9% in October as the facelifted K3 sedan hits its highest volume of the year and is up 10 spots to #17 in the ranking. The new KX5 crossover also adds to the brand’s winning streak.

Chinese brands

Superlatives abound when discussing local Chinese brands this year, and October is no exception. This month means all-time record sales for no less than 11 brands, in descending order of sales: Geely (96.306), Haval (94.005), Baojun (86.510), GAC Trumpchi (37.271), Roewe (33.102), Jiangling (6.816), Changhe (6.777), SWM Motor (6.175), Borgward (5.188), Qoros (2.610) and Foton (2.535). For the first two, it’ll only be a matter of time before they join Changan as Chinese brands to sell more than 100.000 vehicles per month in their home market. Geely is in the middle of an overhaul of its line-up with much more modern vehicles, designed by Volvo‘s Peter Horbury, and four out of its six best selling models are recently renewed products, and those four all beat their monthly volume records: the Boyue (16.779), Vision X6 (10.867), Emgrand GS (10.028) and Emgrand GL (7.050). These four models already make up 46,5% of total Geely sales.  On top of that, Geely’s best selling model Emgrand EC7 misses its all-time volume record of December 2014 by just 800 units (25.015) and its #2 best selling sedan FC Vision also breaks its all-time volume record (15.721).

Haval, Great Wall‘s crossover and SUV brand, has set itself a target of beating Land Rover and Jeep as the world’s best selling SUV brand, and while that’s still a stretch target, it is growing at impressive speed and may top the 1 million sales mark as soon as next year. As mentioned above, October marks a record month for the H6 (56.667) and H2 (21.079), but also for the H7 (6.134), launched in April.

Local brands in trouble are Wuling, down 8,6% at 62.629 sales as China’s best selling model Wuling Hongguang is facing increased competition from other MPVs like the Baojun 730, FAW, down 10,4% to 18.246 sales, and Dongfeng-Nissan’s low-cost brand Venucia, down by a third to 9.160 sales. Nissan has vowed to give the brand more attention and new products to capitalize on the demand for budget cars and crossovers in especially the huge rural market in China.

New models

New model introductions for October will be published in a separate post.

China models ranking October 2016