12.22.2010

Overseas automakers may bloom if car subsidies wane

China Daily, December 18, 2010

By Tian Ying and Liza Lin

Overseas automakers may bloom if car subsidies wane

Traffic jam in Beijing. Analysts said overseas automakers should benefit next year if the Chinese government ends the auto tax rebate as expected by Dec 31. [Photo / China Daily]


BEIJING - Fruit wholesaler Hao Hongfu will wait until next year to buy a car from a General Motors Co venture in China, even though he could get a 1,545 yuan ($232) tax break for buying another vehicle now.

The upcoming Baojun 630 sedan from SAIC-GM-Wuling Automotive Co should be more reliable than a Chinese brand, Hao said. He wants another car to complement the Beiqi Foton Motor Co pickup truck he uses to haul apples, pears and oranges in Shandong province.

"It is a pity to give it up," Hao said of the consumption-tax rebate. "But the Baojun looks very nice. I want to try out a foreign product."

Overseas automakers including GM, Ford Motor Co and Nissan Motor Co should benefit next year if the Chinese government ends the rebate as expected by Dec 31, said Bill Russo, a Beijing-based senior adviser at Booz & Co.

The subsidy, which cuts the tax from 10 percent of the purchase price to 7.5 percent, applies only to cars with engines of 1.6 liters or smaller, a segment of the market dominated by Chinese models.

Local brands accounted for more than 63 percent of the new models with that size engine last year, according to the China Association of Automobile Manufacturers.

"The game that has been played with incentives is to try to keep consumers, especially first-time consumers, interested in purchasing those locally branded cars," Russo said. "To phase out the subsidies is more challenging for local companies than for foreign ones."

Rising incomes also should prompt car shoppers to buy more foreign models in the world's largest auto market, Russo said. China's per capita income of $3,744 last year was more than double the 2005 amount, according to the World Bank.

Total vehicle sales may reach a record 20 million next year, Russo said, an 11 percent increase from the manufacturers association projection of 18 million this year. Total sales are up 34 percent through November over a year earlier, and passenger-car sales rose 35 percent in the same period.

The government hasn't said whether it will extend the rebate into next year. It was continued this year at the request of Chinese manufacturers, said Xiong Chuanlin, the association's assistant secretary-general.

"I doubt the tax cuts will continue," Xiong said last week in Beijing. "We don't think it's appropriate."

The government aims for local automakers, including Geely Holding Group Co and BYD Co, to account for more than 40 percent of the market for cars, multipurpose vehicles and sport-utility vehicles, according to a stimulus strategy released in March 2009.

They now make up 31 percent, said Gerwin Ho, a Hong Kong-based analyst for Citigroup Inc.

"You have some policy withdrawal and that's going to slow down car sales," Ho said of the overall market.

BYD, which is backed by Warren Buffett, has sold the most cars among domestic automakers this year, according to association figures. Its F3 sedan, China's best-selling vehicle, comes with a 1 liter or 1.5 liter engine and is priced from 59,800 yuan.

"The tax-cut incentives definitely played a part in its popularity," Tong Wei, a BYD salesman in Shanghai, said of the F3. "Its sales are likely to dip next year when the subsidies are removed."

BYD spokesman Paul Lin didn't respond to e-mails or calls seeking comment. The company's stock is down 39 percent in Hong Kong this year, compared with a 3.4 percent increase in the city's benchmark Hang Seng Index.

GM, Ford and Nissan are among the foreign automakers introducing smaller cars and expanding into China's interior to compete with domestic companies.

GM, the best-selling foreign automaker in China, said sales are up 33 percent through November over a year ago and may reach a record 2.3 million in 2010. The Baojun model is set to go on sale early next year through more than 100 dealers.

GM, which raised $23.1 billion in an initial public offering last month, said the Baojun line is meant to be affordable. It didn't announce the price. Sales growth the past two years has been "extraordinary" and should be 10-15 percent next year, GM China President Kevin Wale said.


Auto Sales: U.S. and China Driving in Different Directions

Seeking Alpha, December 19, 2010

Traffic jams like this one in Beijing are likely to get much worse. Photo:China Daily

In 2009, China's auto sales surpassed those of the U.S., reaching 13 million units (cars and light trucks). This came as The Great Recession drove U.S. auto sales to a level far below the record of 17.4 million sales in 2005. By 2009 U.S. sales had plummeted to 10.4 million for the year.

Through November 2010, China's auto sales reached 16.4 million, putting that country on track to equal or exceed the U.S. 2005 record. The forecast for 2011 is for sales to reach 20 million which would dwarf the U.S. record.

Meanwhile, the U.S. auto market seems to be headed for 2010 sales between 11 and 12 million, as seen in the following graph from Calculated Risk.

click to enlarge images

JD Powers has forecast U.S. light vehicle sales to be 11.6 million in 2010 and 13.2 million in 2011.

Foreign companies stand to gain market share next year. From the GEINews Blog:

Overseas automakers including GM, Ford Motor Co and Nissan Motor Co should benefit next year if the Chinese government ends a rebate that favors domestic manufacturers as expected by Dec 31, said Bill Russo, a Beijing-based senior adviser at Booz & Co.

It looks like China will move into position as the largest consumer of automobiles in history and is likely to remain there.

As shown in the following graph, it could be said that China and the U.S. are driving in different directions. However, it is to be expected that U.S. auto sales should continue to improve so that the down sloping blue arrow may well be temporary. It is not reasonable to expect that the U.S. growth rate will soon (if ever) reach that of China.

Simply based on population ratios it might be expected that China could eventually have around 3 - 4 times the auto sales of the U.S.

Click here to view the original article at seekingalpha.com

12.16.2010

GM Set to Widen Lead Over Chinese Carmakers as Lure of Tax Subsidy Wanes

Bloomberg, December 16, 2010


GM Set to Widen Lead Over Chinese Carmakers

BYD, which makes China’s best-selling F3 sedan with 1-liter and 1.5-liter engines, has sold the most cars among domestic automakers so far this year, according to association figures. Photographer: Nelson Ching/Bloomberg

GM Set to Widen Lead Over Chinese Carmakers

GM, the best-selling foreign automaker in China, said sales are up 33 percent through November over a year ago and may reach a record 2.3 million. Photographer: Nelson Ching/Bloomberg


Fruit wholesaler Hao Hongfu will wait until next year to buy a car from a General Motors Co. venture in China, even though he could get a 1,545-yuan ($232) tax break for buying another vehicle now.

The upcoming Baojun 630 sedan from SAIC-GM-Wuling Automotive Co. should be more reliable than a Chinese brand, Hao said. He wants another car to complement the Beiqi Foton Motor Co. pickup truck he uses to haul apples, pears and oranges in Shandong province.

“It is a pity to give it up,” Hao, 32, said of the consumption-tax rebate. “But the Baojun looks very nice. I want to try out a foreign product.”

Overseas automakers including GM, Ford Motor Co. andNissan Motor Co. should benefit next year if the Chinese government ends the rebate as expected by Dec. 31, said Bill Russo, a Beijing-based senior adviser at Booz & Co. The subsidy, which cuts the tax from 10 percent of the purchase price to 7.5 percent, applies only to cars with engines of 1.6 liters or smaller, a segment dominated by Chinese models.

Local brands accounted for more than 63 percent of the new models with that size engine last year, according to the China Association of Automobile Manufacturers.

Record Sales

“The game that has been played with incentives is to try to keep consumers, especially first-time consumers, interested in purchasing those locally branded cars,” Russo said. “To phase out the subsidies is more challenging for local companies than for foreign ones.”

Rising incomes also should prompt car shoppers to buy more foreign models in the world’s largest auto market, Russo said. China’s per capita income of $3,744 last year was more than double the 2005 amount, according to the World Bank.

Total vehicles sales may reach a record 20 million next year, he said, an 11 percent increase from the manufacturers association projection of 18 million this year. Total sales are up 34 percent through November over a year earlier, and passenger-car sales are up 35 percent in the same period.

The government hasn’t said whether it will extend the rebate into next year. It was continued this year at the request of the Chinese manufacturers, said Xiong Chuanlin, the association’s vice secretary-general.

Extension Not ‘Appropriate’

“This year, we don’t think it’s appropriate,” Xiong said last week in Beijing. “I doubt the tax cuts will continue.”

The government aims for local automakers, including Geely Holding Group Co. and BYD Co., to account for more than 40 percent of the market for cars, multipurpose vehicles and sport- utility vehicles, according to a stimulus strategy released in March 2009.

They now make up 31 percent, said Gerwin Ho, a Hong Kong- based analyst for Citigroup Inc.

“You have some policy withdrawal and that’s going to slow down the car sales,” Ho said of the overall market.

BYD, which is backed by Warren Buffett, has sold the most cars among domestic automakers this year, according to association figures. Its F3 sedan, China’s best-selling vehicle, comes with a 1-liter or 1.5-liter engine and is priced from 59,800 yuan.

“The tax-cut incentives definitely played a part in its popularity,” Tong Wei, a BYD salesman in Shanghai, said of the F3. “Its sales are likely to dip next year when the subsidies are removed.”

GM, Ford

BYD spokesman Paul Lin didn’t respond to e-mails or calls seeking comment. The company’s stock is down 39 percent this year, compared with a 3.6 percent increase in Hong Kong’s benchmark Hang Seng Index.

GM, Ford and Nissan are among the foreign automakers introducing smaller cars and expanding into China’s interior to compete with domestic companies.

The company, the best-selling foreign automaker in China, said sales are up 33 percent through November over a year ago and may reach a record 2.3 million. It introduced the Baojun last month and said it will go on sale early next year through more than 100 dealers.

GM, which raised $23.1 billion in an initial public offering last month, said the Baojun line is meant to be “affordable,” though it didn’t announce the price. Sales growth the past two years has been “extraordinary” and should be 10-15 percent next year, GM China President Kevin Wale said.

66 Percent Increase

“Anytime an incentive is removed it will have some impact,” he said.

Ford, the second-largest U.S. automaker, expects record sales in China this year after opening as many as 100 dealerships, said Joe Hinrichs, chairman of Ford China. Sales rose 39 percent through October from a year earlier and will benefit next year from an expansion into central, western and northern China, the company said Nov. 25.

The Ford Focus starts at 104,800 yuan. Ford shares have risen 66 percent this year, compared with an 11 percent increase in the Standard & Poor’s 500 Index.

“We are growing the part where the industry is growing the fastest,” Hinrichs said. “We expect another record year for Ford in China next year.”

Nissan, the best-selling Japanese automaker in China, expects to sell 960,000 cars there this year, spokesman Toshitake Inoshita said. Its March compact, which starts from 69,900 yuan, benefited from the tax cut, so its expiration may damp sales, he said.

Nissan, whose shares are little changed this year, said in September it planned to introduce the Venucia brand to help meet demand for cheaper models. It hasn’t been priced yet.

“The multinational companies, GM being one, are trying to reach down a little lower in the price range,” Russo said. “As people in China get wealthier, they tend to buy more foreign- brand products.”

--Tian Ying, Liza Lin. With assistance from Makiko Kitamura in Tokyo. Editors: Michael Tighe,Bret Okeson.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at +86-10-6649-7571 orytian@bloomberg.net; Liza Lin in Shanghai at +86-21-6104-3047 or llin15@bloomberg.net

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net

Mercato dell'auto: IL DRAGONE DIVORA TUTTI

Quattroroute, December 16, 2010


Mercato dell'autoLa Volkswagen Lavida, un modello progettato per la Cina.Mercato dell'autoLa concept che anticipa il nuovo Taxi londinese. La società che li produce è stata acquistata dai cinesi.Mercato dell'auto

I dati sulla crescita del mercato dell'auto cinese sono impressionanti: a novembre sono stati vendute 1 milione e 339 mila vetture, con un incremento del 29.3% rispetto allo stesso periodo dell'anno precedente.

Tappe bruciate. Nei primi dieci mesi del 2010 la Cina si è confermata il primo mercato al mondo, con un totale di 12,49 milioni di unità contro le 10,44 degli Usa. Altro che lunga marcia, Pechino brucia le tappe a velocità vertiginose. Basti pensare che nel 2003 in Cina si vendevano appena 4 milioni e mezzo di veicoli l'anno, mentre il bacino reale è stimato intorno ai 20 e 30 milioni di veicoli l'anno. Eppure, nel 2011 assisteremo a una crescita meno esplosiva (ma sempre di crescita si tratta, gli analisti parlano di + 10%) rispetto gli ultimi anni. Ecco perché.

Fine degli incentivi. È quasi scontato, che il governo di Pechino alla fine dell'anno non rinnoverà gli incentivi per l'acquisto di automobili fino a 1.6 litri di cilindrata. A novembre, questa fascia di mercato ha rappresentato più del 70% delle vendite complessive, ovvero 939.400 vetture, un boom provcato dall'imminente scadenza degli sconti. "Si, nel 2011 il mercato cinese rallenterà" spiega Bill Russo, Senior Advisor di Booz & Company e un ruolo da ex vice presidente di Chrysler in Asia, "ma nel tempo la crescità sarà stabile e costante, trainata com'è dall'espansione della classe media".

I "padroni" sono sempre stranieri. General Motors, Volkswagen, Nissan, Ford, tutti in joint-venture con un partner locale (lo impone la legge), continuano a dominare le classifiche di vendita. Ai produttori cinesi, invece, restano solo le briciole: Geely, che ha acquisito la Volvo, a novembre ha venduto 44.155 auto, meno della metà delle 106.457 di Shanghai-GM e delle quasi 100 mila di Shanghai-Volskwagen. E se si considera che sia GM sia VW hanno anche altre joint venture, allora il distacco diventa abissale. Tra gli altri marchi "autoctoni", Chery è in crescita (67.833), mentre BYD, la Casa sui cui il finanziere Warren Buffet ha investito, ha accusato un crollo delle vendite del 18,6%. "I marchi cinesi hanno guadagnato qualche punto rispetto al passato, ma continuano a godere di una pessima considerazione da parte degli stessi consumatori cinesi", aggiunge Russo.

L'auto pulita? Per ora è un flop. Per ora quelle che vanno a ruba tra Pechino e Shanghai sono le bici elettriche, le auto a pile possono attendere. Ibride ed elettriche non interessano affatto ai cittadini della Repubblica Popolare, soprattutto a causa del prezzo troppo elevato. La BYD, stando a fonti di stampa cinese, avrebbe venduto appena 54 esemplari della E6, un modello elettrico, e circa 290 ibride, fra gennaio e ottobre. Si dice anche la Changan abbia sospeso la produzione di un modello ibrido perché non era arrivato nemmeno un ordine. Persino la Toyota Prius annaspa faticosamente. "Il governo cinese punta sulle energie alternative attraverso sussidi e stimoli ad investire - afferma, ancora Russo - ma la sfida più impegnativa per l'auto elettrica è quello del mercato: c'è tanto scetticismo per soluzioni più costose di quelle tradizionali e ancora tecnologicamente incerte".