The stagnation of the Chinese car market has continued in the second quarter of 2019, with double digit declines in April and May, and an 8,3% loss in June, which market the 12th consecutive month of declines. In the first half of the year, just under 10 million new passenger cars were delivered to Chinese dealers, nearly 15% fewer than in the same period last year. These figures exclude commercial vehicles, minivans and imported cars. In the short term, the Beijing government is not planning any incentives to prop up the market, and in fact is sharply reducing subsidies on one of the fastest growing segments of the Chinese car market: that of EVs and plug-in hybrids. Rather, the government seems to see this market contraction as an excellent opportunity to consolidate the market as (too) small players will be forced to close down or be taken over, while the larger state-owned carmakers also feel extra pressure to merge their operations and cut loss-making domestic brands. Also, China’s central government has pressured most major cities and provinces to adopt State 6 emissions rules (which are similar to the Euro 6 standards) on July 1. This caused local dealerships to offer steep discounts on vehicles that don’t meet these standards. The upside of this is that by now most dealerships have reduced their inventory so there’s hope that the second half of the year will be a whole new ballgame.
In the second quarter of 2019, sales of all vehicle types declined, with crossovers and SUVs taking the smallest hit at -12% to take 42,3% of the total market, as sedans were down 14,9% to take 51,7% of the market and MPVs continued to slide the fastest at -27% to take just 6% of the market. Within those figures, sales of EVs and plug-in hybrids surged 30% to approximately 320.000 sales, of which 263.000 EVs, 54.000 plug-in hybrids and 829 fuel cell EVs. In the first half of the year, sales of New Energy Vehicles jumped 57% to around 617.000, including around 490.000 EVs, 126.000 plug-in hybrids and 1.102 fuel cell vehicles. With sharper rules for subsidies on electric vehicles (they now need to have a range of at least 250 kilometers to qualify for subsidies, up from 150 km), these figures may stagnate in the second half of the year.
The share of foreign brands jumped 4,8 percentage points on the first quarter and 2,4 percentage points on Q2 of 2018 to 63,3%, the highest share since 2015. This is a result of a loss of 23,9% in sales of domestic brands, just when import brands were downby just 9,2%. Among these, the Japanese brands continued their hot streak with a gain of 3,4% in Q2, the only nationality to improve their sales, as European brands were down 7,5%, US brands down 20,8% and South-Korean brands in the biggest trouble, down 35,4%%. As a result, Japanese brands hit their second-highest share in China since 2011 at 23,2%.
In the models ranking, the Volkswagen Lavida has racked up another three consecutive monthly wins, giving it a 6-month winning streak and making it the only model to have topped the charts so far in 2019. Despite that, it only managed to outsell the #2 Nissan Sylphy by just 8.300 units in Q2, most of which came from April, when the Toyota Corolla was also ahead of the Sylphy. Best selling crossover in China is still the Haval H6, with the Volkswagen Tiguan in 8th place, Nissan X-Trail in 11th place, the Honda CR-V in 15th place and the Nissan Qashqai in 18th place. Next best selling domestic crossover is the Geely Boyue at #20th Volkswagen places four nameplates in the top-10, with the Bora and, ranking 6th and 10th respectively. The Wuling Hongguang makes it only two Chinese nameplates and only one MPV in the top-15. Best performers in the top-10 are the Honda Accord, up 134,7% and the Buick Excelle GT, up 47,4%, while a bit further below Honda CR-V also more than doubles up at +117% as does the the Roewe i5 at +135,8%. Worst performers in the top-50 are the Volkswagen Jetta and Baojun 510 as both lose almost 60% of their sales, with the Buick Envision also down by almost half at +45,6%. The Chevrolet Cavalier drops out of the top-50 with sales down 64% as it is being cannibalized by the new Chevrolet Monza (#13).
One year after launch of local production for the BMW X3, the nameplate sets consecutive monthly sales records in April and May, the Borgward BX5 and Volkswagen Tharu both have their best ever sales month in May, while the Volkswagen T-Roc and Jaguar XEL each improve their highest monthly volume in both May and June.
That makes the Monza the best selling newcomer (<12 months), followed by the Volkswagen Tharu at #27, the Geely Binyue at #34, the Haval F7 at #41 and the Volkswagen Tayron at #46. Just outside the top-50 we find the Jetour X70 continuing its strong launch at #55, followed by the Toyota Avalon at #79, with the Mercedes-Benz A-Class sedan at #81, the BYD Qin Pro at #89 and the Hyundai La Festa at #90.
Newly launched this quarter are the Exeed TX and TXL (#205) from Chery’s new subbrand, the Baojun E200 (#290) replacing the E100 (#214), the Dorcen G60 (#240) as the brand’s second model and already its best seller, the Geely Xingyue SUV Coupe at #250, the Hongqi HS5 crossover at #264, the Aion S from GAC’s new EV subbrand at #276, the Volvo XC40 at #298, the Changhe M60 at #306, the BYD S2(#308) on the platform fo the Yuan small crossover (#77) but without the external spare wheel on the rear door, and finally the Nio ES6 as the brand’s second model at #397, the Jinbei Guanjing at #417 and the Hongqi HS7 at #473.
Despite its wave of new crossover models, the VW brand is down 5,6% in Q2, although that does mean an improvement of market share. And since these figures represent wholesale deliveries to dealers, they don’t account for retail deliveries which were estimated to be up in June as dealers were discounting their surplus stock in order to return to healthy levels. A lower wholesale figure makes sense in that respect, but we’ll have to see in coming months if dealers are able to increase their factory orders again. Mercedes-Benz outsells Audi in each of the past three months, with BMW as the best selling luxury brand in April, based on domestically produced models. BMW is especially helped by the launch of Chinese production of the X3, boosting its domestic volume by almost a quarter. Volvo continues to impress at +18,2% and that’s with the XC40 not even in full swing. The Swedish brand broke its monthly volume record in May and then improved further in June, breaking 11.000 monthly sales twice in a row. In contrast, Land Rover and Jaguar are still struggling with sales of their domestically produced models down by 46,6% and 21,1% respectively.
The French brands are also losing grip on the market quickly, with Peugeot and Citroën both losing more than half of their volume, and DS having delivered just 312 vehicles in Q2 and not a single car in June, which could be seen as a sign that PSA is getting ready to pull the plug out of its luxury brand endeavour, but that might be a bit premature to think. In fact, DS is planning to launch the DS3 Crossback e-Tense EV crossover this year in China in a bid to jumpstart sales. Meanwhile at Renault the lack of new products after its initial two crossovers is severely hurting sales, with a loss of 81%. VW’s Czech brand Skoda is losing market share as well, with sales down 29,7% in the second quarter.
Buick slightly underperforms the market at -16,7% and Chevrolet is down 16,2% as the brand is in the midst of a complete overhaul of its model portfolio which should help GM recover its lost market share in China. The new Monza Their luxury sister brand Cadillac is actually up 19,1%% and greatly outperforms the market. Ford on the other hand is freefall at -46,7% as the brand has pledged to turn around its decline with more focus on the specifics of the Chinese market in upcoming model launches. The One Ford strategy has now officially failed, as the brand finally understands that Chinese buyers are different than those in the US and Europe. The low-budget Territor crossover took a quarter of Ford’s Chinese sales in Q2 and was the brand’s best seller in April and May, but was outsold in June by the updated Escort and Focus. However, the worst performer among US brands is Jeep as the brand loses 57,6% of its volume in Q2 and there are no signs of a recovery for the brand that had such a promising start in China and was on a seemingly unstoppable winning streak worldwide, until it suddenly and unexpectedly stagnated last year.
Speaking of unstoppable winning steaks, Honda appears to be working on one of its own, with a 17,6% increases in the second quarter, adding almost 1,5 percentage points to its already record market share. Honda is by far the best performing brand in the top-10 with only Toyota coming anywhere near with an 11,3% increase when the entire rest of the top-7 is in decline. That leaves Nissan in 3rd place among Japanese brands and 4th place overall with a 7,9% decline in sales. Among the smaller Japanese players, Mazda loses a significant chunk of share at -32,9%, while Mitsubishi stabilizes its market share with a 15,9% loss, about even with the overall market. As Suzuki is winding down its brand in China, sales are down 55,8%. The Japanese luxury brands Infiniti and Acura see their sales improve by 17,8% and 136,5% respectively but both remain niche players, especially compared to Lexus which doesn’t even have local production and relies exclusively on (heavily taxed) imports. Acura benefits from the RDX crossover which hit its first 1.000+ sales month in June, the first time for any Acura model since the smaller CDX in December 2017. And even the slow-selling TLX-L sedan hit a new high in June, albeit at just 341 sales.
By the middle of last year and early this year, Hyundai and Kia showed signs of recovery from the big losses they suffered in 2017 due to the missile conflict that hurt South-Korean brands in general in China, but the tables have turned again with both brands suffering great losses in the second quarter. Hyundai sales are down 33,9% and Kia is down 38,2%. Unsurprisingly, their misguided strategy of selling updated old generation models at a low price point seems to have backfired, hurting sales of their more modern and higher-margin models.
Geely maintains its position as best selling Chinese brand, but is down to an overall #5 and its sales are down 28,4%, ending the winning streak the brand was enjoying as China’s hottest ticket in 2018. Still, Geely outsells its nearest domestic rival by more than 100.000 sales in Q2, as Changan also struggles with a 21,5% decline. The former best selling domestic brand is now barely ahead of Haval, which manages to improve its sales by 1,4%. But the biggest loser among large Chinese brands is without question Baojun: for a while, the GM-SAIC-Wuling brand was storming up the charts in the wake of Geely, as it was the #2 Chinese brand in all of 2018. However, sales have crashed in 2019, down a painful 55,9% in Q2, making it only the 9th best selliing domestic brand in the second quarter, behind even Chery, a brand that was outsold by Baojun by a 2-to-1 margin in 2018. Even new peoduct launches can’t seem to stop the bleeding at Baojun, with the more upmarekt RS-5 crossover racking up fewer than 8.500 sales in the quarter. BYD is up to 4th place among domestics and #14 overall with sales down just 2,5%, but this doesn’t paint the whole picture for BYD, as first-half sales of EVs and plug-in hybrids of the brand almost doubled (up 95%) to nearly 146.000 while deliveries of traditional gasoline powered vehicles dropped 45% to 82.500.
At SAIC, Roewe is down 18,3% while MG is up 2,6% and catching up in terms of volume, with the brands in 15th and 17th place respectively, while Maxus has broken its monthly volume record in April, leading to a 57,5% improvement in the quarter. Combined sales for the domestic brands under Shanghai Automotive were 214.500 in Q2, which would give it a 6th place overall, ahead of its partner Buick but still behind Geely. GAC, Chery and Wuling maintain their market share but lose about 15% of their volumes, Dongfeng (-21,3%) is down in share, but BAIC is in freefall and losing more than half of its sales in Q2. In contrast, FAW is in recovery mode wiht sales up by more than half, helped by the Bestune T77 and the uprising of the Hongqi brand. Similarly to BYD, JAC has almost flat overall sales, but this hides a 35,6% decline for gasoline powered models, to 22.810 sales and a 145% increase in EV sales to 20.390.
Lynk & Co appears to have already peaked, with sales down 2,2% in the second quarter to 27.000, although it still outsells its direct rivals Wey (down 41,6% to 20.265) and the resurrecting Borgward (+41,8% to 13.219). In fact, Borgward set a new monthly sale record in May, and so did the EV brands Denza and Weltmeister. Another EV startup, Xpeng, even set new monthly highs in both April and May. Among smaller domestic brands, Soueast (-63,9%), Leopaard (-70,7%), Qoros (-64,5%), Changhe (-59,3%), Brilliance (-78,6%), Landwind (-65%), Lifan (-84,5%), Haima (-94,5%), Bisu (-80,9%) and Luxgen (-77,4%) are quickly losing their relevance and are in danger of running out of money and chances to recover. Best selling new brand is still Chery’s low cost Jetour brand at #34, followed by Great Wall’s EV brand Ora at #44 and Zotye’s Dorcen brand at #57. Weltmeister is in #59 ahead of rival Geometry at #63 and Nio at #65.
China brands ranking Q2 2019
Please note these figures are for locally produced models only (unless stated otherwise), they exclude imported cars, which make up only a small portion of sales in China.
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