Chinese car sales are back in their traditional fashion: up with booming figures, as 1,55 million locally produced cars were sold in July, an increase of 28,7% over July 2015, although it has to be noted this was an exceptionally low month with sales down 5% over July 2014, because the domestic stock market collapsed just over a year ago. Still, we’re talking about the best July ever recorded, and by a large margin. This is also supported by the Seasonally Adjusted Annualized Selling Rate, which stands at 22,2 million units, the highest of the past four months. Year-to-date, Chinese car buyers have taken delivery of over 12,1 million locally produced cars, an increase of 13% over the first seven months of last year. As we’re used to by now, sales of SUVs and crossovers fueled the market, up 47% to 580.700 units, followed by MPV sales at +39% to 153.600. Even sedan sales showed impressive growth in July, naturally slower than the overall market, but a 20% improvement is the best we’ve seen in months, which translates into 824.900 sales. After enjoying record shares of over 43% in January and February, the local brands have seen their share slowly decline to 37,5% in July. Year-to-date, 40% of the cars sold in China wore a badge from a domestic brand, still two points above the full-year 2015 figure and the highest it’s ever been.
What will be interesting to see is if the Chinese auto market will finish 2016 in the positive. That may seem like a no-brainer as it ended last year with a bang, when the government stepped in to save a depressed market after the stockmarket meltdown, by launching a tax cut for cars with small engines (below 1,6 liters). This boosted sales to record heights in the last three months of 2015, as you can see in the graph above. The tax cut is scheduled to end by December 31st and if that happens as planned, Chinese consumers will pull forward their prospective purchases to 2016 and the market will get yet another boost in the last few months of the year before plummeting back down in early 2017. However, if the government decides to prolong the tax break (and communicates that in a timely manner), the market will remain more stable but it remains to be seen if it can keep up with the sales pace set in Q4 of last year. If the tax break stays, chances are the final figure for this year will be 22 million vehicles, an increase of “just” 9%. Still, that would be the healthiest solution for the market as a whole.
The leader of the model chart Wuling Hongguang celebrates 12 consecutive 40.000+ months and keeps the Haval H6 behind, by an ever-shrinking margin. The H6 topped the ranking in April and has been close behind ever since. Its multiple price cuts this year have boosted sales 69% in July and 43% YTD to help it close in on the year-to-date #2 position. The Volkswagen Lavida is the best selling sedan model in China, but is under threat from the Buick Excelle GT. The GAC Trumpchi GS4 goes from strength to strength in fifth place, once again frankly outperforming the Baojun 560, which has seen its volume shrink for four straight months, coming from 42.000 in March to just over a third of that figure in July. The Honda CR-V is also very impressive in 12th place, ahead of the Buick Envision for the first time in 11 months to take the title of best selling foreign brand SUV.
Best selling newcomer is the Chery Arrizo 5, launched in March and up to #33, followed by the Hyundai Elantra Lingdong in 38th place but still behind the previous generation, Hyundai Elantra Langdon in 21st place. The Geely Boyue (#41), also launched in March, breaks through the 10.000 monthly sales and is now the #2 selling model for the brand. The Buick Weilang (#31) quadruples its volume, the Hyundai Tucson (#39) quintuples and the Honda Civic (#51) even sells six times as many units as last July, helped by the new generation. The two models launched last month move in different directions: the Jeep Renegade improves to 4.000 units in its first full month of sales, while the Mazda CX-4 backs down to a still very impressive 5.200 sales after its blockbuster introduction month.
July is a historic month, marking the return of the formerly German brand Borgward, now in Chinese ownership and launching its first car since the 1960s: the BX7 crossover. This is discussed in detail in the separate New model introductions in China, July 2016 post.
Volkswagen has surprisingly recovered from its dip of last year and the first few months of 2016, up 32% to 200.000 units on the strength of its sedan models as the brand is still missing out on the crossover boom. Imagine the potential volume VW is missing out of because of its poor product planning. Speaking of which, PSA desperately needs fresh (and the right) product, with Peugeot down 13% again and Citroën barely in the positive at +1,5% but still down 14,5% year-to-date. Not to mention DS, which hits rock bottom with a disgraceful 686 sales, the just above its lowest figure ever. But that was in its third month of sales with a single model, the brand now has four models, of which the DS 5LS sold zero units last month, the DS 5 hatchback 48 units and the DS 4S hatchback 121. Embarrassing. Skoda has now outsold Peugeot for the third consecutive month and is closing in quickly year-to-date, while it was at just two thirds of its French rival exactly one year ago. Back then it was even behind Citroën, which it now outsells by 25%.
At the European luxury brands the storming up the charts by Mercedes-Benz has temporarily stalled with an increase of just 8%, the first time in 20 months the brand does not improve by double digit or even triple digit figures. The reason for this is the mere 173 units of the E-Class L that were sold in July instead of the average 5.000 monthly sales, as the factory is preparing for the new generation. That means the brand will be back with a boom as soon as deliveries of that model start gaining traction. In the meantime, BMW is up 18% on its new generation X1 crossover and Audi gains an impressive 31%, its highest monthly increase since the end of 2014. And that’s also while being held back by the upcoming model change of the A4L, down 19%. Volvo is up 20% with both the XC60 and S60 showing nice gains, and the brand is preparing the launch of the important all-new S90L.
Renault sold 1.500 units of the locally produced Kadjar, which is the lowest of the five months the model has been on sale. Then again, it’s still more than the combined figures of DS and Fiat. I haven’t mentioned Fiat in my monthly reports for a while, because it would’ve been the same story every month: July marks the 12th straight month of declines larger than 33%. Fiat has also broken its own volume record for 3 months in a row now. Its record low volume, that is, with a shameful 606 sales of its two models combined.
At least FCA does have other positive news coming out of China, with Jeep showing healthy gains to a record 12.500 locally produced vehicles, now that it has a two-vehicle line-up with the Cherokee and the Renegade. Ford is also back in growth mode with a 28,8% increase after three months of double digit declines. After briefly dipping into negative YTD figures, the brand quickly returns into the black. The Escort sedan more than doubles its volume to set a new monthly volume record at 24.500 sales while the Focus also gains. Its mid-sized models Mondeo sedan and Kuga crossover each lose 30% or more, though. At General Motors, Chevrolet has finally caught a change of fortunes after 16 months of double digit losses. Sales are up 19% in July thanks to the renewed Cruze and Malibu XL. Buick continues its great momentum with a 42,5% increase while Cadillac celebrates a third straight month of 8.000+ sales as the all-new XT5 crossover improves further.
Speaking of momentum, Honda delivers a 45,6% increase to become the #2 brand in China, behind VW, selling 104.400 vehicles in July. That pushes the brand past Toyota year-to-date, making it the best selling Japanese brand. The new generation Civic , but also the updated City and Elysion give the brand a boost, while its three crossovers Vezel, XR-V and CR-V also gain at least 38% each. Nissan also improves, but slower than the overall market at +22,3% helped by the Qashqai, X-Trail and Murano crossover and the Sylphy and Lannia sedans. In contrast, Toyota loses volume for the second month in a row, at -12,6%. Like at Ford, its mid-sized models take the biggest hits, with the Camry down by a third and the RAV4 down almost half. Nice improvements of the Levin and Crown can’t offset those losses.
Despite the new CX-4, Mazda sales are stable, as sales of the Mazda6 Atenza have all but come to a full stop at just 79 units, even less than those of the previous generation Mazda6 Classical. If it appeared Suzuki and Mitsubishi were out of trouble in June, July more than makes up for that good month, with Suzuki sales down by a third, the deepest loss since last September and at 7.800 sales the brand’s lowest monthly volume since at least 2003. Mitsubishi does even worse at -60% to just 1.350 sales as the ASX hits rock bottom after an excellent June.
Hyundai and Kia continue to improve thanks to extensive price reductions and new hit models. Hyundai is up 29% thanks to the Elantra Lingdong and Tucson, while the Sonata and Santa Fe take a hit. Kia sales jump 36,6% which narrows the year-to-date loss to just under 2%. Volume drivers are the K3 sedan and the KX5 crossover, while the K2 and K4 lose volume.
The big news with domestic brands is Haval, the SUV brand from Great Wall Motor, closing in on Changan, the best selling Chinese brand in the ranking. With sales up 54% to 60.000 units and a 28% gain to 63.000 sales for Changan, Haval is dangerously close to outselling its competitor for only the second time in the past 3,5 years. Year-to-date, Changan still leads by over 278.000 units, so won’t feel threatened at all. Baojun sales are stable at +3%, which causes the brand to drop from 3rd placed domestic brand to #8 as its rivals are storming up the charts, especially those who’ve been launching fresh product recently, like Geely, BAIC, Dongfeng and BYD. But there are losers among the domestics as well: JAC is down 11%, having launched its latest model, the Refine S2 almost a year ago, and Brilliance loses 53% as it hasn’t launched any new models since the V3 small crossover in May 2015. Ironically, the V3 is also the brand’s biggest loser in July, with sales falling off a cliff. The model sold a record 21.000 units last December, but has lost volume every month since, to just over a tenth of that figure in July: 2.200 sales. The story is even worse at FAW, with sales down 72% in July and -38% YTD. A year ago, the oldest auto maker of China was #13 among domestics, now it’s down to #27 with its 10-vehicle line-up, barely ahead of small players with just one or two models like Changhe and Yema, and even below Borgward in its first month of sales.
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