After a stable January, Chinese car sales rise a promising 20,2% again in February 2017. This is a result of the Chinese New Year festivities, which alternate between January and February each year, so it’s better to look at combined figures of these two months before drawing conclusions about the strength of the Chinese car market. Thanks to 1,59 million sales in February, combined volume for the first two months of the year is up 7,6% to 3,76 million. This is still stronger than most analysts had predicted, as expectations for the first quarter of 2017 were in the low single digits due to the rise on sales tax on vehicles with small engines. The Seasonally Adjusted Annualized selling Rate of 22,68 million is the lowest it’s been since last July, but still significantly up 12% from the 20,25 million of February 2016. SUVs and crossovers are unsurprisingly the main winners with sales up 36,9% to 644.750 units in February (first 2 months: +18,9% to 1.496.712), while sedans gain 15,3% to 772.555 sales (first 2 months: +4,2% to 1.857.478) and MPVs lose volume for the second month in a row at -3,9% to 167.076 (first 2 months: -10,2% to 393.533). Sales of New Energy vehicles (EVs and PHEVs) jumped 30% in February, following a 74% decline in January when electric car subsidies were reduced 20%. This month, domestic brands also reach a new record share of 46,5% in February, breaking the previous high of 45,4% last December. For the first two months combined, domestics have a 44,4% share of their home market, the highest it’s ever been at this stage of the year.
Behind the traditional leader Wuling Hongguang MPV, the Haval H6 crossover is back into 2nd place followed by the Buick Excelle GT as the sedan leader for the first time since September 2015. Behind the Volkswagen Lavida, the Toyota Corolla also hits a highest ranking at #5. But the big surprise is the Haval H2, up from a record #18 last month to 6th place, which means the two best selling crossovers are both from Great Wall‘s SUV brand. The GAC Trumpchi GS4 is third (#8 overall), ahead of the Baojun 560 (#10), Changan CS75 (#13) and Geely Boyue (#14). We find 8 crossovers in the top-25 for the second time in a row, and ever. Biggest winner in the top-25 is the Nissan Sylphy (#15) with sales almost tripling and highest newcomer (<12 months) is the Boyue ahead of the Dongfeng Fengguang 580 (#16) and the Baojun 310 (#20). In its third months of sales, the Volkswagen Tiguan L outsells its short wheelbase version for the first time at 12.077 (#32) vs. 7.226 (#66). The regular Tiguan sold 12.291 units last year, so although there’s obviously some cannibalization from the Tiguan L, combined sales of the two versions are still up 57%.
Volkswagen is down for the first time since last February at -2% and loses market share in the first two months with sales up 3,5%, while Mercedes-Benz outsells Audi (in terms of locally produced models) for the second time ever after last December, and even BMW is on Audi‘s tail. Mercedes-Benz almost doubles its volume of last year to 33.862 sales of locally produced models, while Audi loses 13% to 28.694 and BMW more than doubles up to 27.210 units. Volvo gains 32,5% to 4.726 sales, but Jaguar sells its lowest number of XFL sedans since the model’s launch last September, as is the Range Rover Evoque. At PSA, a dramatic January is followed by only a slightly better February, with Peugeot sales down 35% as even the still fresh 308, 408 and 4008 have an off-month. Citroën does even worse at -47,8% although that’s an improvement over last month. Only two of its models sell over 1.000 units this month, and that includes DS which is down an embarrassing 72% to its lowest figure in China since its launch: just 330 units from 4 models. But hey, that’s not even the worst performer, as Fiat sales are down 92,7% to just 91 units as the brand may as well pull the plug on China to focus on the success of Jeep and perhaps Alfa Romeo in a few years.
Renault sells 5.781 units of its two crossovers and will celebrate its first anniversary of local production next month. Skoda sales are up 5,5% to 19.200 which it outsells both PSA volume brands for the second consecutive month.
Not a lot of happy faces from the US this month, as Ford loses 18,6% to record its second month of double digit losses. All of its models lose volume except for its lowest volume model, the Everest SUV. Rival Chevrolet does slightly better at -7,5% in February and +2,1% in the first two months. Sales of its Cruze have collapsed to the lowest figure since its launch in 2009, as the new Cavalier has heavily cannibalized its sibling. The Malibu is down just 10% on last year, but the lowest figure in 12 months and all of its other models are also down significantly. All hope for the brand is now aimed at the launch of the locally produced Equinox crossover in Q2. Buick offers little consolation for GM, with sales up just 2,6%, which means it’s still down 2,2% in the first two months. Only the Excelle GT and the LaCrosse gain volume, as even the GL8 MPV is down after a record month in January. On the other hand, Cadillac continues to grow at full speed, with another +166%, once again selling more cars in the People’s Republic than in its home market. Jeep also more than doubles up as it has grown from just one model to three, and the Compass is quickly gaining traction with just under 4.500 sales in its third month, but appears to cannibalize the Renegade which is down to its lowest volume since its launch last June.
The Japanese brands have had a very successful start of the year. Nissan is one of the fastest gainers in February with sales up 84%, although that’s compared to a particularly weak month last year. Its volume of 52.695 sales of locally produced models is still lower than its rivals Honda and Toyota, even though Nissan is still ahead for the first two months when it comes to total volume, including imports. Honda saw its sales rise 51,3% to 79.800, helped by the new generation Civic, continued strong performance of the CR-V and strong sales of its other sedans. Toyota also showed impressive gains at +44,5% to 80.551 units thanks to the Corolla, the Vios (the brand’s second best selling model for the first time ever) and the RAV4.
Mazda and Mitsubishi do even better in relative terms, with a 83% gain for the former, ast he CX-4 hits a new volume record of 7.444 sales and its 3 other models also show impressive gains. Mitsubishi had a particularly weak month last year (its lowest volume since 2009) and is up almost sixfold to 7.115 units, of which 72% comes from the new Outlander, which started local production last September. That leaves Suzuki and there won’t be any champagne popping there, with sales down 36,9% to 7.466, its fifth straight month of double digit losses and its second lowest volume ever (after August 2005).
The mixed fortunes continue for the South-Koreans, which are plagued by increasing tensions between their home country and China’s ally North-Korea, as well as increasingly dissatisfied dealers who are forced to heavily discount their vehicles to offload excessive stock that they were forced to accept from the manufacturer, which erodes profits. Some brands have offered compensation to their dealers (eg. BMW) and especially Kia dealers are increasing the pressure to be compensated too. This shows in the sales figures (which are wholesale deliveries from manufacturer to dealer), as Kia loses 24% of its volume due to especially weak sales of its crossovers as well as the K2 sedan, while the facelifted K3 sedan gains volume. Hyundai does better but also still loses market share at +12,9% in February.
The locals also face mixed fortunes, with Geely once again leading the charge. The brand that has introduced a number of well-received new or updated models last year, from the same designer as Volvo, sees its sales almost triple to 89.129 units, making it the #3 brand in China in terms of local production, and second domestic brand behind Changan. The brand is on schedule to cross the 1 million sales milestone this year. Changan remains the best selling domestic, despite growth of just 10,4% but may lose that title next year if Geely keeps pumping out hot new products at this pace, and it’s planning to launch two more small crossover/hatchbacks in the coming months: the Yuanjing X1 and the V3. #3 Domestic brand Baojun only gains 13,1% even though it has launched two new models in the past six months, as its existing models 560 and 730 have lost some volume after peaking briefly. That leaves Haval in 4th place of local brands, with sales up one third thanks to the H2 more than doubling, stable sales of the H6 best seller and the addition of the H7. Its other 4 models sell in significantly lower volumes.
Dongfeng is up 20% and has already launched 2 new models this year. The brands needs to be careful not to fall into the same trap as BAIC: launching too many products under various (sub)brands but with too low volume each, and as a result has high capital expenses with too little return. BAIC has grown explosively in recent years as its portfolio has stretched to no less than 28 models but none has sold over 10.000 units a month so far this year. Its sales are up just 3,5% in February but still down 28,4% for the two months after a harsh collapse in January. Dongfeng is up just 1,7% in the first two months and now has 21 models in its range, of which three have reached five figure sales in January. Chery gains 44,6% in February, as just a few years ago the brand was in a similar position as the two mentioned above, and sales collapsed due to the confusing line-up. After it shed obsolete subbrands and models, Chery is growing again. Of course, at the time it had no profitable Joint Venture to produce for a foreign rival (it now builds Jaguar and Land Rover vehicles for the Chinese market), as opposed to BAIC and Dongfeng, who can subsidize their loss-making local operations from the profits generated by their JVs, which doesn’t give them much incentive to get their act together and become a self-sustaining automaker.
GAC Trumpchi doubles its volume thanks to its two crossover/SUVs GS4 and GS8, which combine for 95% of total brand sales. A smaller crossover GS3 is also ready to hit the market in the next few months, which will help the brand extend its winning streak. Another brand benefitting from launching its first crossover is SAIC Roewe, almost tripling thanks to the RX5, but also helped by improvements of the facelifted 360 sedan. BYD depends on EVs and PHEVs more than any other large automaker and that hurt the brand in January when subsidies were cut. BYD recovered in February with sales up 30% but is still down 14,7% for the first two months. After stable sales in January due to a strong first month in 2016, Soueast more than doubles in February with 97,5% of its sales coming from its two crossovers DX7 and DX3.
We’ll discuss the new launches for the first two months in a separate article.
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