Car 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%.
For the first time since May 2013 the Volkswagen Lavida tops the Chinese car sales ranking, which means traditional leader Wuling Hongguang has been defeated 4 times in the past 13 months, including the last two. The Haval H6 has led the way three times, in April and November 2016 and last month. The top-7, which includes 3 crossovers, 3 sedans and an MPV, is very close: all selling between 30.000 and 38.000 units. Like in Europe, the Volkswagen Tiguan benefits from its new generation and is the fastest growing model in the top-10. But that gives perhaps too little credit to newcomer Baojun 510, which improves further on its already impressive volume of last month, but which also obviously cannibalizes on its larger sibling Baojun 560. Just outside the top-10, the Geely Boyue celebrates 6 months of 20.000+ sales, while the new generation Honda Civic continues its strong form in 26th place. Other notable improvers are the Dongfeng Fengguang 580 (#43, more than tripling its volume), the Mercedes-Benz E-Class L (#44, up almost fivefold) and the Geely Emgrand GS (#45, almost quadrupling its sales from its introduction month). Just outside the top-50, the BMW X1 hits a new record for the nameplate, at over 9.000 sales, making it the brand’s #2 selling model in China for the first time. In 63rd place the Jeep Compass becomes best seller for the American brand in China, as expected.
Among other recent launches, the FAW Besturn X40 (#56) already takes 57% of total FAW sales while sister model FAW Xenia R7 slightly rebounds from its dip last month to indicate the two models may be able to coexist. Combined sales of the two crossovers add up to almost 83% of sales for the combined (sub)brands under FAW. The Soueast DX3 improves to almost 8.400 sales, while the Honda Avancier (#84) and UR-V (#152) sell 10.000 units combined. Just launched last month, the Chevrolet Equinox (#89) is still in start-up mode with almost 6.300 sales in its second month on the market, with the larger Volkswagen Teramont close behind it in 91st place. The two French midsized SUVs Renault Koleos (#127) and Peugeot 4008 (#128) are selling in similar numbers, which is either an impressive performance by Renault or a disgrace for Peugeot, because the latter brand has been well established in China for decades while the former has just started local production last year. The Skoda Kodiaq improves to #173 and the Peugeot 5008 enters the top-250 just behind the Borgward BX5, which sells less than its introduction month.
Market leader Volkswagen beats the market with a 1,4% increase in May, resulting in almost flat sales for the first five months. The Magotan (#12, +77%) and Tiguan (#6, +71%) lead the way for the brand, while the Jetta (#10, -21,2%) Lamando (#103, -45,9%) and the Gran Lavida hatchback (#361, -96,8%) pull it down. In only its second month on the market, the Teramont SUV already sells almost 50 times as many copies as the slightly more expensive Phideon flagship sedan. It makes you wonder why mainstream manufacturers even bother to develop large sedans. Sister brand Audi slightly recovers from its slump due to tensions in its dealer network, and after three months of double digit declines is still down by almost 5%. Audi has now lost volume for 8 of the last 9 months. Its sales of locally produced models are still ahead of those of its German rivals, which are closing in quickly, but looking at total brand sales, Audi has trailed Mercedes-Benz and BMW since the start of 2017. In the first five months, BMW Group sales (including Mini and Rolls Royce) are up 20% to 243.700, virtually on par with Mercedes-Benz sales (including Smart), up 36% to 242.600. Audi, which has been China’s favorite luxury brand for decades, lags with just 202.900 sales, a loss of 15%. VW Group’s Skoda brand also loses volume for the third month in a row, despite the introduction of the Kodiaq SUV. The Octavia (#66, -37%) takes the biggest hit, which the Superb (#133, +32%) is unable to offset.
If you’re still not convinced PSA is in big trouble in China, then its May sales should do the trick: Peugeot loses more than 24% for the fifth consecutive month at -38% to just 16.400 sales. Except for the 308 (#156, -36%), all of its existing models lose more than half of their volume, while its two new crossovers 4008 and 5008 have been unable to turn the tide. Sister brand Citroën is down for the 10th straigh month, of which the last five were losses of 47% or greater. Its May figure was down 63%, as only one of its models sold more than 1.000 units. To add insult to injury, Citroën was outsold for the first time ever by….. Volvo! That’s right, last year the French brand outsold the Chinese-owned Swedish brand by a 3,5 to 1 ratio, but in May Volvo improved sales of its 3 locally produced models by 40% and now sold more of these models than Citroën’s 6 locally produced cars. Meanwhile, PSA’s Volvo rival DS has sold an average of just over 500 cars a months this year, although that still beats Fiat‘s average of just 350 sales. Newcomers in terms of local production Renault (stable at about 6.000 monthly sales), Land Rover (stable at around 5.000 monthly sales) and Jaguar (up to a new high of 1.700 sales) fare much better.
General Motors is losing share in a declining market, not a good sign of health. Buick is down by 8,5% in May, due to the end of production of the ancient Excelle, and a loss of 63% for the Encore (#166) as small, import-brand crossovers are struggling to compete against the much cheaper local competition. Buick does show nice improvements for the GL8 MPV (#27, +82%) and LaCrosse large sedan (#70, +69%). Cadillac remains a bright spot for GM with sales up 60% as all 4 of its locally produced models showed double digit gains. Chevrolet is boosted by the new Equinox crossover, which helps the brand to its second consecutive month of gains. Chevrolet adds 9,2% to its May sales, as the Trax (#241, -50%) lost traction and combined sales of the new Cavalier (#64) and Cruze (#131) were also down by 28%. On other end of the scale, the updated Sail continued its strong form with a plus of 37%. Cross-town rival Ford showed its first gain of the year thanks to discounts intended to do exactly that. The brand won 17,7% but is still down 13,3% year-to-date. In May, the winners were the Taurus large sedan (#182, +478%), EcoSport small crossover (#194, +245%), Mondeo midsized sedan (#58, +188%) and Kuga midsized crossover (#88, +100%), while its top sellers compact sedans Escort (#15, -11%) and Focus (#32, -9%) slightly declined. Jeep remained at its current pace of around 20.000 monthly sales, as the all-new Compass (#63) is leading the charge ahead of the Cherokee (#71, -12,4%) and Renegade (#136).
The Japanese brands benefit from the struggles of the South-Koreans and show nice gains in China. Honda leads the way as we’ve become used to, with a gain of 18,2%, boosted by the new generation Civic (#26, +190%) and the introductions of the Avancier and UR-V large crossovers. Nissan improves by 4,2% thanks to the updated Tiida hatchback (#86, +250%) and Murano (#180, +61%) while the Sunny (#188, -59%) and Lannia (#147, -52%) lose ground. Toyota also loses ground, as sales are down 5,3%, despite strong performances of the Prado (#96, +104%) and newcomers Vios FS hatchback (#134) and Yaris L sedan (#102). The brand was dragged down by slumping sales of the Levin (#132, -70%, including the hybrid), Corolla EX (#385, -96%) and cannibalization of the aforementioned newcomers on their existing counterparts Vios sedan (#79) and Yaris L hatchback (#123). Mazda racks up its 10th consecutive month of double digit gains with anotehr +24,3% improvement, helped by the CX-4 crossover (#101) which celebrates its first anniversary, and the Mazda6 Atenza midsized sedan (#125, +139%). Mitsubishi more than doubles up for the fifth month this year, although the rate of growth is slowing down to “just +110%), as the Outlander is nearing its first anniversary of local production, but all of its other models lose volume by double digits. Suzuki proves its gain in March was just a short-lived success, as the brand is down a harsh 43,5% again, just 100 sales above its all-time low of last month.
There’s no sign of improvement in the fate of Hyundai and Kia, which are still struggling with anti South-Korean sentiment following the diplomatic spat between China and North-Korea on one side and the US and South-Korea on the other side. Combined sales of the two brands are down by almost 100.000 units in May alone and by almost 300.000 so far this year. Hyundai is down from #2 brand in May 2016 to #18 in May 2017 as it loses almost two thirds of its sales. Its only model to improve is the Santa Fe SUV (#108, +395%) and the new Celesta sedan (#97), as even the new Verna Yuena sedan is down by more than two thirds on sales of the previous generation last year. Its other crossovers ix25 (#221, -85%), ix35 (#281, -88%) and Tucson (#337, -97% to just 403 sales) are struggling the most. Sister brand Kia fares no better, also with a loss of almost two thirds of its volume as here too the brand’s crossovers are taking the biggest hit: the KX3 is down to #315 and the KX5 is down to #297 both with a loss of 90%. The all-new KX7 sells 612 units for a #306 position. The Kia K3 (#80, -51%) is the brand’s only model to sell more than 2.000 units.
As mentioned above, the domestic Chinese brands combined show an increase of 3% on May of last year. And for the second consecutive month Geely is the best selling Chinese brand at home thanks to an increase of 58% while Changan drops 26%. Geely benefits from the models launched last year with its new design language and continues to roll out new product, including the upcoming Lynk & Co. luxury brand. At Changan, the quick expansion of its line-up has slowed and as sales of its crossovers have stalled, its sedans and SUVs are losing steam. At least Changan is back above Baojun and Haval again, the two brands which also outsold it in April. The two are not far behind, as Baojun gains 72,2% thanks to its new 510 crossover (#9), but Haval scores its second consecutive monthly loss. Great Wall, Haval’s parent company, is also planning to launch an entry-level luxury brand, which will be crossover-only: Wey, named after the company’s chairman Wei Jianjun. Dongfeng also has a second straight month of declines, and its third of the year as its confusing range of (sub-)brands and even more confusing distribution network (where dealers from one sub-brand cannot sell cars from the other subbrand) is starting to show its downsides. This once again proves that state-owned automakers (like Changan and Dongfeng), dependent on the profits of their production Joint Ventures with foreign automakers, are in a worse position than privately-owned automakers (like Geely and Great Wall). GAC Trumpchi gains 48% to extend its double-digit winning streak thanks to its crossovers GS4 (#5) and GS8 (#81).
In 15th place overall we find Chery with a gain of 8,3%, while Wuling suffers from cooling demand for its market leader (but for how long?) Hongguang (#2 this month). BAIC has a similar problem with a confusing product and distribution structure as Dongfeng and is down 26%, subbrand Huansu is almost stable at just -1,4%. BYD still has’t recovered from the reduction in EV subsidies, as it refuses to compensate by offering discounts, as other brands have done to keep that part of the market alive. SAIC Roewe is the fastest growing brand in the top-40 thanks to its new models RX5 crossover (#18) and i6 sedan (#76). Sister brand SAIC MG also grows nicely at +87% thanks to the new ZS crossover (#52), even though it cannibalizes its sister model GS (#230, -70%). Of the newly launched brands (<12 months), Hanteng still leads ahead of SWM Motor, with Borgward only in third place, despite adding a second model with the BX5 (#249).
China brands ranking May 2017
Please note these figures are for locally produced models only, they exclude imported cars, which make up only a small portion of sales in China.
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