The Chinese car market was down 0,6% in January, which is actually surprisingly strong if you consider these two factors: January had five fewer selling days than in 2016 because of the timing of the weeklong Lunar New Year holiday, and the expected impact of the tax increase on cars with engines of 1,6 liters or less. These cars had received a tax cut from 10% to 5% since Q4 of 2015, which was increased to 7,5% in January before a next step back to 10% in 2018. Considering 72% of sales during this period were cars that qualified for the tax cut, the increase was expected to have a dimming effect on the market in the first quarter of this year. In that light, half a percent loss is not representative for the rest of the year, and doomsday thinkers will have to wait until February results before we can draw any conclusions about a slowing of demand in the worlds largest and fastest growing car markets. The Seasonally Adjusted Annualized selling Rate of 25,8 million is a fair indication the market is still healthy as it’s still 1,6 million higher than January last year. A total of 2,17 million locally produced passenger cars were sold in China in January, still the second best ever January by a large margin. Crossover and SUV sales were of course the strongest segment with 11% growth on last year to almost 881.000 units, while sedans lost 3% of their volume to 1,08 million sales. MPVs, which had shown steady growth until recently, decline a shocking 21% to just over 206.000 sales. Local brands had a 42,8% share of the market, which is lower than January last year and lower than December, but still higher than the 2016 full year figure.
The models ranking has somewhat “normalized” after the Haval H6 has been challenging and even outselling the Wuling Hongguang in recent months, and the Nissan Sylphy was on top of the sedan ranking at the end of 2016. This year starts with the Volkswagen Lavida back as the best selling sedan and #2 overall, behind the Hongguang, with the H6 more than 14.000 units of the top spot for a similar top-3 as in January 2016. More impressive are the record 4th place for the VW Jetta, the record 5th place of the GAC Trumpchi GS4 and the #18 spot for the Haval H2. We find 8 domestic brand crossovers in the top-25 compared to just 6 for the full-year 2016.
Market leader Volkswagen starts 2017 with a bang, as it sets a new monthly volume record at almost 326.000 deliveries, up 7% on last year, making this the third straight January (and the third time ever) VW’s China sales top 300.000 sales. The brand sets new sales record for the Jetta, Lavida and Lamando sedans, while the Tiguan L sells over 7.500 units in its second month of sales, almost a quarter of total Tiguan sales. Mercedes-Benz is the big winner among import brands, with sales of its locally produced models up 42,5% to a record 42.077 sales as we also see record volumes for the C-Class L, GLA, V-Class and the new GLC topping 10.000 sales for the second straight month, a figure its predecessor GLK never reached in a single month. Rival BMW grows 14% to 31.589 locally produced models, set a new monthly record, thanks to strong sales of the 5-Series L and X1 and record sales of the 3-Series L. Meanwhile Audi sales decline 7,6% to 51.069 units. But there’s a catch to these figures, as all of our reported sales statistics for China are wholesale deliveries (from the factory to the dealers). Retail sales for Audi were down 35% to significantly below its rivals for the first time ever, as a number of dealers has gone on strike. They’re not happy with VW Group’s plan to form a second Joint Venture for Audi with SAIC Motor (who also produces VW and Skoda models), next to its current JV with FAW. That would add a competing dealer channel, which threatens to erode profits of the existing dealers. We’ll see the true consequenses of these strikes in the coming months as wholesale deliveries are set to follow suit quickly.
Audi was also sued for 28 billion yuan by some dealers who claim they’re already losing profitability because the brand has built additional dealerships faster than its sales have grown. A second JV might restart growth, but I don’t think having two dealer networks will benefit the brand. In fact, Mercedes-Benz has trailed Audi and BMW for decades in China and only started to catch up in recent years when it merged its two dealer networks (one for its locally produced JV models and one for its import models).
PSA has had another horrid month in China as it has trouble turning its fate around. Citroën sales are down 70% to a mere 8.200 units, the lowest monthly volume since 2008 when the market was five times smaller. As a result, the French brand’s market share of just 0,38% is a record low since the brand’s launch in China in the mid-1980s. To add insult to injury: Citroën sold as many cars as Mitsubishi this month, a brand that it outsold by a 15-to-1 ratio exactly one year ago. The brand even was outsold by Renault, which only started local Chinese production 10 months ago. DS sales are down 57% and even Peugeot loses 40% of its volume, despite a few very fresh models. Peugeot market share also dips below 1% for the first time since at least 2005. Skoda, which sold its 2 millionth vehicle in China this month, exactly 10 years after its launch, hits a record volume of 34.809 sales. The Czech brand was outsold by both Peugeot and Citroën as recently as 2015 but sold more than all three PSA brands combined in January.
Jaguar–Land Rover hits a bump in the road with the lowest volume for the XFL since its launch last September and the lowest volume for Land Rover since last February. Volvo continues its slow but steady growth, as the brand gained 4% while the all-new S90 was only in its second month of sales.
Buick hits a second month in negative territory with a loss of 4,75% to just over 117.000 units despite record volume for the GL8 thanks to the new generation. Alternatively, Chevrolet appears to have returned to growth again at +9,3% to 46.300 sales, its third plus in four months after 17 straight months of losses. The Malibu was the big winner, even though the all-new Cavalier became the brand’s best seller for the first time in only its fifth month of sales. The problem with this is that it keep cannibalizing the Cruze, as combined sales of the two models are still below the Cruze figure of last year. As I’ve written two weeks ago, Cadillac has sold more cars in China than in its home market US for the first time ever in January. The CT6, XTS and XT5 all had record sales while the ATS-L enjoyed its second-best month ever, and all four models had higher volume in China than in their home market USA. Total brand sales topped 16.000 units for the first time, and improved 160% on last year. That’s even better growth than Jeep had, with a plus of 75% to 14.500 sales as the new Compass had its second month on the market but is still gaining traction.
Ford sales are in freefall with a loss of 28% to just over 70.000 units as as only its best seller Escort sedan and the low-volume Everest SUV managed to slightly improve their volume. The pain was equally divided over the rest of the line-up, with even the crossovers EcoSport and Kuga showing significant losses.
After a loss in December, Honda is back in full force with a gain of 17,7% to just under 100.000 sales in January. The Civic is the big winner for the brand, with a second ever month above 15.000 sales, making it the brand’s best seller for the second consecutive month, ahead of traditional leader CR-V. Nissan follows suit with a 14,7% gain to 81.500 sales thanks to the Sylphy sedan which almost doubles its volume year-over-year. The new generation Tiida also helps boost the brand’s figure. Toyota grows a bit more moderately but still has its best January ever (just like its two rivals) and increases its market share with sales up 3% to 100.500 units. The Highlander and RAV4 crossovers are the big winners for the brand.
Among smaller Japanese brands, Suzuki remains the big loses at -57% to just 9.900 sales, the third time in 7 months (and since 2007) that the brand sells less than 10.000 cars. It drops below 0,5% of market share, half of its 2015 share and a quarter of its 2012 share. Mazda continues its double digit growth with sales up 19,5% to 28.000 units as the new CX-4 crossover accounted for more than the brand’s growth. Mitsubishi does even better as the brand that was all but pronounced dead appears to have taken a new lease on life in China with sales more than quadrupling on a notably bad January 2016. Almost two thirds of Mitsubishi’s 8.200 sales were for the new Outlander crossover which started local production five months ago.
Infiniti added 5,4% as the brand continues to grow slowly in China with its 2-car line-up. After a reasonable start for Acura since July, sales of its CDX China-only crossover have dropped off a cliff to just 455 units in January.
Kia took a big hit in January with a loss of 39% to 30.000 sales, as the K2 sedan lost 10.000 units of volume and the brand’s crossovers had an abysmal month: both the KX3 and KX5 scored their lowest figures by far since their launch, as both were below 2.000 sales for the first time ever. Both were thus outsold by the Sportage R, the previous generation Sportage which lost 72% of its volume as the KX5 was supposed to replace it. Sister brand Hyundai improved 6,3% to 80.000 sales mostly thanks to the Santa Fe and Elantra Lingdong, as sales of the Tucson crossover crumbled 86%.
The domestic brands that were the stars of the show last year continued their progress in January. Geely gained more than 70% to sell over 100.000 units for the third month in a row (and ever), thanks to again new volume record for the EC7 sedan, Emgrand GS hatchback and Emgrand GL sedan. The Vision X6 crossover enjoyed a 5th month of more than 10.000 sales and the Boyue crossover sold over 20.000 units for the second straight month. AS a result, Geely was the #4 brand in China and #2 domestic behind VW, Changan and Buick. GAC Trumpchi gained another 40% to 46.300 sales, its first time above 40.000, as the GS4 crossover kept selling briskly and the GS8 large SUV hit 9.400 sales, which will undoubtedly prompt other domestic manufacturers to enter the large SUV segment too. Chery added 20% to a similar 46.400 sales thanks to the new Tiggo 7 crossover and the Arrizo 5 sedan. SAIC Roewe doubled its volume of last year to 31.000 units thanks to 20.000 sales of its new RX5 crossover.
But not all brands had the champagne flowing. Baojun showed a reversing trend with sales down 6,3% to 77.000 after showing 29 consecutive months of growth, all but one of which were double or even triple digits. The new 310 small hatchback’s record sales of 18.000 units couldn’t offset the losses of the 560 crossover and 730 MPV which each sold over 40.000 units in January 2015. Baojun will return to growth when sales of its second crossover 510 start February or March. thanks to a constant flow of new models Beijing Auto (BAIC) has been on an even more impressive winning streak of 58 months of which 57 in double or triple digits, which came to an end with a 1,8% loss in December, but the brand’s explosive growth has hit a brick wall in January with sales down 47% to 38.000 units. The biggest hit came from the Weiwang M30 MPV which came down from 17.000 units last year to just 638 sales in 2017.
Copycat-king Zotye lost 40% of its volume to 18.800 sales as both the SR7 (Audi Q3 clone) and the SR9 (Porsche Macan clone) hit their lowest volumes since their respective launches in February and November of last year. Zotye’s other crossovers T600 and especially the Damai X5 also lost a significant chunk of their sales. Brilliance was down more than 80% to just 4.000 sales, BYD sales tanked by a third to 28.700 units as the brand relies heavily on EVs and Plug-in hybrids (it’s the biggest seller of electrified cars in the world), which took a big hit in January as EV subsidies were trimmed to make place for a new stimulus program which involves requiring manufacturers to sell a significant number of New Energy vehicles in the near future. This should boost sales of these cars, but will also increase competition for BYD.
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