The Financial Times, June 11, 2012
By Patti Waldmeir in Shanghai
Markets worldwide have been shaken recently by unexpected signs of slowdown in the Chinese economy. But one sector seems to be bucking the trend – and without much in the way of government stimulus.
Car sales in China rose 22.6 per cent year on year in May, according to figures released by the China Association of Automobile Manufacturers. Association officials said they expected the market to strengthen further in coming months.
General Motors’ total vehicle sales rose 21 per cent year on year in May; Nissan gained 20 per cent; and German carmakers BMWand Audi were up 31 per cent and 44 per cent respectively.
The figures represent a recovery from the industry’s slow growth in the first quarter, with passenger car sales – excluding small commercial vehicles – for the first five months growing 5.5 per cent on the same period a year earlier.
Those are hardly the kind of figures to give global stock markets the jitters, especially when compared with figures from India, where car sales rose only 2.8 per cent year on year in May. The Chinese sales figures came before last week’s interest rate and petrol price cuts, and were achieved with little in the way of government stimulus.
Bill Russo, head of Synergistics auto consultancy in Beijing and a former head of Chrysler in China, says: “The May results are a reflection of the fundamentally strong growth drivers that exist in China – mainly continued urbanisation and growth of the middle-class population, recovery from last year’s supply chain disruptions, and pent-up premium car demand.”
Some analysts are predicting that growth will strengthen further because of lower interest rates and petrol prices, which were not reflected in the May figures. Jeff Chung, of Daiwa Capital Markets, says: “We also expect China’s latest interest rate cut to help stimulate auto sales in the second half of the year.”
However, Klaus Paur, auto analyst at Ipsos in Shanghai, does not expect a “significant direct impact” on car sales from either lower interest rates or fuel price cuts.
Mike Dunne, of Dunne and Co, an Asia-based auto consultancy, says: “What to watch is how much these measures help strengthen consumer sentiment, which has been cautious. Is the government signalling that it’s now safe to go back into the water?”
Analysts are divided on whether the government will step in with further stimulus measures targeted at the auto sector.
“I think China is not able to issue further stimulus policies this year,” says Rao Da, secretary-general of the China Passenger Car Association. Measures announced recently by central and local governments – such as Chongqing’s Rmb3,000 ($475) car purchasing subsidy – have so far had little impact, analysts say.
News last month that Beijing would spend Rmb6bn to support alternative fuel vehicles has had little impact. “This is a very small share of the overall market today,” says Mr Russo.
The Chongqing stimulus is designed primarily to help the local carmaker, Chang’An. “Other substantial markets with local production such as Beijing, Shanghai and Guangzhou are very unlikely to follow such a measure,” says Mr Paur, noting that those cities are imposing tough measures to restrict new car registrations.
But the picture is not all rosy in the China car industry: “Carmakers appear to be disproportionately optimistic while inventories at dealerships are growing,” says Mr Paur, noting that this “could put pressure on car prices and profitability”.
China car sales buck slowdown trend - FT.com
http://www.ft.com/intl/cms/s/0/da68155a-b3ac-11e1-8b03-00144feabdc0.html#axzz1xYPCBVCr
General Motors’ total vehicle sales rose 21 per cent year on year in May; Nissan gained 20 per cent; and German carmakers BMWand Audi were up 31 per cent and 44 per cent respectively.
The figures represent a recovery from the industry’s slow growth in the first quarter, with passenger car sales – excluding small commercial vehicles – for the first five months growing 5.5 per cent on the same period a year earlier.
Those are hardly the kind of figures to give global stock markets the jitters, especially when compared with figures from India, where car sales rose only 2.8 per cent year on year in May. The Chinese sales figures came before last week’s interest rate and petrol price cuts, and were achieved with little in the way of government stimulus.
Bill Russo, head of Synergistics auto consultancy in Beijing and a former head of Chrysler in China, says: “The May results are a reflection of the fundamentally strong growth drivers that exist in China – mainly continued urbanisation and growth of the middle-class population, recovery from last year’s supply chain disruptions, and pent-up premium car demand.”
Some analysts are predicting that growth will strengthen further because of lower interest rates and petrol prices, which were not reflected in the May figures. Jeff Chung, of Daiwa Capital Markets, says: “We also expect China’s latest interest rate cut to help stimulate auto sales in the second half of the year.”
However, Klaus Paur, auto analyst at Ipsos in Shanghai, does not expect a “significant direct impact” on car sales from either lower interest rates or fuel price cuts.
Mike Dunne, of Dunne and Co, an Asia-based auto consultancy, says: “What to watch is how much these measures help strengthen consumer sentiment, which has been cautious. Is the government signalling that it’s now safe to go back into the water?”
Analysts are divided on whether the government will step in with further stimulus measures targeted at the auto sector.
“I think China is not able to issue further stimulus policies this year,” says Rao Da, secretary-general of the China Passenger Car Association. Measures announced recently by central and local governments – such as Chongqing’s Rmb3,000 ($475) car purchasing subsidy – have so far had little impact, analysts say.
News last month that Beijing would spend Rmb6bn to support alternative fuel vehicles has had little impact. “This is a very small share of the overall market today,” says Mr Russo.
The Chongqing stimulus is designed primarily to help the local carmaker, Chang’An. “Other substantial markets with local production such as Beijing, Shanghai and Guangzhou are very unlikely to follow such a measure,” says Mr Paur, noting that those cities are imposing tough measures to restrict new car registrations.
But the picture is not all rosy in the China car industry: “Carmakers appear to be disproportionately optimistic while inventories at dealerships are growing,” says Mr Paur, noting that this “could put pressure on car prices and profitability”.
China car sales buck slowdown trend - FT.com
http://www.ft.com/intl/cms/s/0/da68155a-b3ac-11e1-8b03-00144feabdc0.html#axzz1xYPCBVCr
No comments:
Post a Comment