1.08.2011

Car sales to be strong despite unfavorable policies

Shenzhen Daily, January 4, 2011

THE country’s automotive market, the largest in the world, is expected to grow strongly this year in spite of the government’s decision to phase out some tax incentives and restrict new car sales in the Beijing city, analysts forecast.

General Motors, the largest foreign maker of cars and light commercial vehicles in China, Tuesday announced sales up nearly 29 percent year on year in 2010, to 2.35 million vehicles —- partly as a result of tax incentives that ended Dec. 31, when a partial purchase tax holiday for small cars was phased out by the government.

China has gradually eroded tax incentives for small vehicles introduced in 2008 to help the Chinese market recover from a temporary hiatus as a result of the global financial crisis.

Purchase taxes on vehicles with engines of 1.6 liters or below were cut from 10 to 5 percent in 2009, then raised to 7.5 percent last year and back to 10 percent for 2011. Some subsidies for rural car buyers were also phased out and the Beijing city announced sharp limits on the number of new license plates to be issued in 2011.

But most car market analysts expect continuing sales growth in low double digits this year, in spite of these measures. Kevin Wale, head of GM China, has said he expects 2011 Chinese motor sales to rise another 10 to 15 percent year on year.

Other Chinese vehicle makers have yet to report annual sales for 2010 but motor analysts expect total sales of about 17.5 to 18 million vehicles — up about 30 percent over 2009. Most car market analysts in China expect sales in the 20 million range for 2011.

“The incentives were gasoline on the fire of Chinese market growth, and that fire will continue to burn, fuelled by urban wealth accumulation,” said Bill Russo, of Synergistics, a Beijing motor consultancy, and former head of Chrysler in China. “The rate of growth may slow to a more sustainable level but it will still be enviably strong compared with the mature markets.”

Restrictions on Beijing car sales would also have limited impact, most analysts said, saying that Beijing accounted for only 5 percent of mainland car sales, which were growing most strongly in areas outside first-tier cities.(SD-Agencies)



Workers on a production line at Jiangxi Changhe Suzuki Car Co. Ltd. Auto sales in China exceeded 16 million units from January to November last year, according to the China Association of Automobile Manufacturers. The figure represented a 34.05 percent surge compared with the same period in 2009 and the total for the whole year was expected to hit 18 million. For two consecutive years, China has surpassed the United States as the world’s biggest car market in both output and sales of new vehicles. Xinhua

1.07.2011

China to continue green-car subsidies over coming year

Taipei Times, January 1, 2011

China said it will continue to offer subsidies for energy-efficient cars this year. The move will help the world’s largest auto market as other factors threaten to slow its rapid growth.

The Chinese Ministry of Finance said in an online notice that the subsidies for fuel-efficient vehicles and new energy vehicles will be extended through the year to help cut emissions. The notice did not provide further details.

Vehicle sales in China hit a record high last year and are expected to keep rising this year, but at a slower rate.

The Chinese government will end subsidies for vehicle sales in rural areas starting today, three days after announcing a halt in incentives for buyers of small vehicles.

The incentives being stopped in rural areas include those for small cars and trucks, the Ministry of Finance said in a statement yesterday. That ends a policy started in March 2009 to foster automobile demand at the height of the global recession.

The government said on Tuesday that it will raise the sales tax on vehicles with engines of 1.6 liters or smaller to 10 percent from its current 7.5 percent. The tax was 5 percent in 2009.

Policies including a consumption-tax rebate, subsidies for rural car buyers and incentives of up to 18,000 yuan (US$2,731) to trade in older models helped China’s total vehicle sales jump 46 percent last year, helping the country overtake the US to become the world’s biggest automobile market.

China’s vehicle sales may reach 20 million units this year according to Bill Russo, a Beijing-based senior adviser at Booz & Co.

1.04.2011

China Car Sales Stay in the Fast Lane

Financial Times, January 5, 2011

By Patti Waldmeir in Shanghai

China’s automotive market, the largest in the world, is expected to grow strongly this year in spite of Beijing’s decision to phase out some tax incentives and restrict new car sales in the capital, analysts forecast.

General Motors, the largest foreign maker of cars and light commercial vehicles in China, on Tuesday announced sales up nearly 29 per cent year on year in 2010, to 2.35m vehicles – partly as a result of tax incentives that ended on December 31, when a partial purchase tax holiday for small cars was phased out by the government.

Beijing has gradually eroded tax incentives for small vehicles introduced in 2008 to help the Chinese market recover from a temporary hiatus as a result of the global financial crisis.

Purchase taxes on vehicles with engines of 1.6 litres or below were cut from 10 to 5 per cent in 2009, then raised to 7.5 per cent last year and back to 10 per cent for 2011. Some subsidies for rural car buyers were also phased out and Beijing announced sharp limits on the number of new licence plates to be issued in 2011.

But most car market analysts expect continuing sales growth in low double digits this year, in spite of these measures. Kevin Wale, head of GM China, has said he expects 2011 Chinese motor sales to rise another 10 to 15 per cent year on year.

Other Chinese vehicle makers have yet to report annual sales for 2010 but motor analysts expect total sales of about 17.5m to 18m vehicles – up about 30 per cent over 2009. Most car market analysts in China expect sales in the 20m range for 2011.

“The incentives were gasoline on the fire of Chinese market growth, and that fire will continue to burn, fuelled by urban wealth accumulation,” said Bill Russo, of Synergistics, a Beijing motor consultancy, and former head of Chrysler in China. “The rate of growth may slow down to a more sustainable level but it will still be enviably strong compared with the mature markets.”

Tang Nan, a Shanghai-based motor analyst with Tianxiang Investment Consulting, said the phasing out of tax incentives may hit carmakers’ profits but not sales – because carmakers may cut prices to compensate for higher taxes. “Sales will still be strong, because China is entering a period when most families need to purchase cars as they purchased bikes in the past,” she said.

Restrictions on Beijing car sales will also have limited impact, most analysts said, noting that Beijing accounts for only 5 per cent of mainland car sales, which are growing most strongly in areas outside first-tier cities.



GM’s 2010 China Vehicle Sales Climb 29% on Stimulus

Bloomberg Business Week, January 4, 2011

Click here to view the original article

Jan. 4 (Bloomberg) -- General Motors Co., the biggest overseas automaker in China, boosted sales in the country 29 percent last year as government stimulus policies and rising incomes spurred demand for its Buick and Chevrolet models.

Sales totaled 2.35 million vehicles, Detroit-based GM said today in an e-mailed statement. The growth rate slowed from 2009, when deliveries surged 67 percent to 1.83 million.

The company expects sales this year to grow as much as 15 percent, according to Kevin Wale, president of local operations, as the government ends rural subsidies and tax breaks that helped China became the world’s largest auto market. The automaker plans to add about 12 new models in two years to sustain demand, including its first under a new Chinese brand.

“The expiring of the subsidies will have some impact on the market this year,” said Bill Russo, a Beijing-based senior adviser at Booz & Co. “It’s a tangible impact for GM, but not catastrophic.”

China raised the sales tax on small vehicles to 10 percent from 7.5 percent on Jan. 1 as it ends measures designed to support auto sales. Rural subsidies, first introduced in March 2009, have also ended.

The government said on Dec. 23 it would set a monthly quota of 20,000 new vehicle licenses in Beijing as the city seeks to ease traffic and cut pollution. Non-transferable license plates will be issued through a lottery system.

GM’s car venture with SAIC Motor Corp. boosted sales 42 percent last year to 1.03 million. Its models include Buick Excelle and Regal cars as well as Chevrolet Lova compacts.

Minivan-maker SAIC-GM-Wuling Automotive Co. increased sales 16 percent to 1.23 million vehicles in 2010. Its first sedan, the Baojun 630, is set to go on sale later this year through more than 100 dealers.

--Liza Lin, Tian Ying. Editors: Terje Langeland, Vipin V. Nair.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

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

1.03.2011

China to End Subsidies to Auto Buyers in Rural Areas

Bloomberg Business Week, December 31, 2010

By Bloomberg News

Dec. 31 (Bloomberg) -- The Chinese government will end subsidies for vehicles sales in rural areas starting tomorrow, three days after announcing a halt in incentives for buyers of small vehicles.

The incentives being stopped in rural areas include those for small cars and trucks, the Ministry of Finance said in a statement on its website today. That will end a policy started in March 2009 to foster automobile demand at the height of the global recession.

The government said Dec. 28 said it will raise the sales tax on vehicles with engines of 1.6 liters or smaller to 10 percent from its current 7.5 percent. The tax was 5 percent last year.

Policies including a consumption-tax rebate, subsidies for rural car buyers and incentives of up to 18,000 yuan to trade in older models helped China’s total vehicle sales jump 46 percent last year. The nation overtook the U.S. to become the world’s biggest automobile market.

China’s vehicle sales may reach 20 million units in 2011, according to Bill Russo, a Beijing-based senior adviser at Booz & Co.

--Michael Wei. With assistance from Ying Tian in Beijing. Editors: Michael Tighe, Vipin V. Nair.

To contact the editor responsible for this story: Bloomberg News at swong139@bloomberg.net

China ends vehicle sales subsidies

The Vancouver Sun, January 3, 2011

The Chinese government ended subsidies for vehicles sales in rural areas Jan. 1, just days after announcing a halt in incentives for buyers of small vehicles. The incentives being stopped in rural areas include those for small cars and trucks, the Ministry of Finance said in a statement on its website today. That will end a policy started in March 2009 to foster automobile demand at the height of the global recession.

China's vehicle sales may reach 20 million units in 2011, according to Bill Russo, a Beijing-based senior adviser at Booz & Co.



Read more:

1.02.2011

China Auto Market Will Continue to Drive Sales for Western Manufacturers in 2011

Money Morning, December 23, 2010


The world's largest carmakers, including Toyota Motor Corp. (NYSE ADR: TM), General Motors Co. (NYSE:GM) and Volkswagen AG, expect China's red-hot economy to keep auto sales rolling at a record pace in 2011, making it the third year in a row the Red Dragon will top the U.S. in car sales.

China's vehicle sales jumped 46% in 2009, dethroning the United States as the world's largest auto market and ending more than a century of American dominance that started with the
Model T Ford.

The nation's sales of passenger cars, buses and trucks rose to 13.6 million in 2009, the fastest pace in at least 10 years, according to the China Association of Automobile Manufacturers. At the same time, U.S. sales tumbled 21% to 10.4 million, the lowest level since 1982, according to
Autodata Corp.

China's vehicle sales have surged since 1999 as its gross domestic product (GDP) growth averaged more than 9% a year, helping U.S. automakers make up for slumping demand in the West. China's vehicle sales surged 30.45% in the first half of the year to 7.18 million units, compared to 5.6 million for the United States.

"
China is becoming the center stage of development for the 21st century global auto industry," Bill Russo, a Beijing- based senior adviser at Booz & Co., told Bloomberg. "Economic growth has directly translated into growth in automobile sales."

Fatih Birol, chief economist for the
International Energy Agency (IEA) says that today 700 out of every 1,000 people in the United States and 500 out of every 1,000 in Europe own cars. But in China, only 30 out of 1,000 people own cars. And Birol thinks that figure could jump to 240 out of every 1,000 by 2035.

The China's automobile market is expected to grow by 15% in 2011, and sales growth at GM is expected to match that pace, according to GM's China President Kevin Wale.

Volkwagen AG (PINK:
VLKAY), Europe's biggest auto manufacturer expects its sales to grow 10-15%, but remain constrained by a shortage of capacity, according to Soh Weiming, the company's executive president for China.

"
I would anticipate nothing less than that and we will grow together with the market," Soh told Bloomberg News in an interview at an auto conference in Guangzhou, China on Monday.

Toyota, the world's largest automaker, said it expects its China sales to rise 13% to 900,000 vehicles in 2011. And Nissan Motor Co. Ltd. (PINK:
NSANY) projects its sales will rise 17% to 772,000 units.

Even though Beijing is set to withdraw heavy incentives this month that helped boost its auto sales by 34% to 16.4 million through November, car sales growth in China is expected to again surpass the United States in 2011.

Auto sales in China may hit a whopping 20 million in China in 2011, according to data compiled by Booz & Co.

Meanwhile, light-vehicle sales in the United States could reach as high as 12.8 million units, Ashvin Chotai, managing director of auto consultant Intelligence Asia Automotive, told
Bloomberg.

Excluding trucks and buses, Chinese passenger-car vehicle sales reached 12.45 million through November this year.

Even though China has stretched its lead over the United States and other markets, the elimination of subsidies and capacity bottlenecks are slowing the pace of growth.

GM and its joint ventures increased vehicle sales in China by 33% over a year ago to 2.2 million vehicles in the first 11 months of this year, the company reported earlier this month. VW-owned brands sold 1.8 million vehicles in China through November, an increase of 38% from a year earlier.

A shortage of manufacturing capacity will constrain VW's ability to meet demand in the nation, Soh told
Bloomberg. The Wolfsburg, Germany-based automaker has said it will spend $14 billion (10.6 billion euros) through 2015 to build two factories to supplement the nine it currently operates in China, boosting production to 3 million cars annually.

"The next 24 months will be tough for us as we have production constraints," Soh said. "VW's biggest challenge to growing sales is limited capacity in China."

Hyundai Motor Co. (PINK:
HYMLF), which projects sales will grow just 2.9% in 2011 to 720,000 units, will also be limited by a lack of capacity, Noh Jae-man, president of the automaker's Chinese operations told Bloomberg.

Seoul-based Hyundai intends to build its third Chinese factory as it strives to boost Chinese capacity by 50% to 900,000 vehicles a year by 2011. Ford Motor Co. (NYSE:
F) is spending $490 million on a third plant in China.