China’s vehicle sales pick up speed

The Financial Times, December 10, 2012

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Vehicle sales in China, the world’s largest market, picked up speed last month as the mainland economy showed signs of recovery and the decline in sales of Japanese cars, hit hard by a Sino-Japanese territorial dispute, appeared to have slowed.

Wholesale deliveries of passenger cars to dealers rose nearly 9 per cent last month year on year, to 1.46m units, boosting year-to-date growth to just above 7 per cent, the China Association of Automobile Manufacturers said on Monday.

Total vehicle sales, including trucks and buses, rose 8.2 per cent and could exceed 19m for the year, CAAM said. Last year, China sold a total of 18.5m vehicles, compared with 12.8m light vehicles sold in the US.

Sales of Japanese cars also showed some signs of recovery in China, although motorists still remained reluctant to buy Japanese brands in the wake of street protests in September that were sparked by friction over a chain of islands in the East China Sea.

Sales of Japanese cars rose 72 per cent in November from October but for the month were still down 36 per cent compared with the same period last year, CAAM figures showed.

“It will take a long time to establish the consumer belief that Japanese cars are once again fashionable,” said Bill Russo of Synergistics car consultancy in Beijing. He said a recovery will depend on resolution of the underlying political dispute and will take years rather than months.

Domestic carmakers in China also saw November sales boosted by a surge in exports, which rose 23 per cent year on year with a total of 91,700 units shipped, said Namrita Chow of IHS Automotive in Shanghai.

Car market analysts expect a strong finish to the year as carmakers deepen discounts in an effort to hit their annual sales targets.

December car sales should be “ideal”, judging from the momentum gained in November, said Chen Shihua, CAAM head of statistics.

The strong figures for China contrast with India, where slowing economic growth, high interest rates and rising fuel costs damped demand. Sales of passenger cars fell 8.3 per cent in November year on year, according to the Society of Indian Automobile Manufacturers.

Carmakers had expected strong sales during the annual Hindu festival season, which this year peaked later than usual, in November.

Sales of motorcycles – an indicator of the economic strength in rural areas – were also flat in a year where income for many farmers was hit by a delayed monsoon. The only bright spot was sales of utility vehicles, favoured by India’s rich, which were up nearly 70 per cent over the same time last year.