Chinese Vehicle Sales Rise 23.6% Y/Y in March

According to data released by the China Association of Automobile Manufacturers (CAAM), the number of vehicles sold in March rose by 23.6% year-on-year (y/y), reports Dow Jones News Wires. The total number of vehicles registered during the month stood at 700,500, 515,800 units of which were passenger cars, a 26% y/y increase. As a result of the March data, sales of passenger vehicles in the first quarter of the year increased by 20.4% y/y to 1.85 million units.

In the fiercely contested battle to be the top-selling passenger car manufacturer in the country, Volkswagen (VW) took the top two spots in the March sales chart with its two joint ventures (JVs), First Auto Works (FAW)-VW and Shanghai Volkswagen Automotive, which sold 54,271 units and 49,643 units, respectively. Behind this pair came the largest independent carmaker in the country, Chery, which narrowly beat General Motors' (GM) JV with Shanghai Automotive Industry Corporation (SAIC), Shanghai GM, into third spot with 40,692 units against 39,178 units. The next two positions were occupied by rival Japanese JVs—FAW Toyota, which sold 35,411 units, and Guangzhou Honda, which recorded 32,049 passenger car sales.

Outlook and Implications

During the first couple of months of 2008, heavy snowfall hit parts of the country, resulting in vehicle production stoppages (see China: 30 January 2008: Chinese Vehicle Production Halted by Snow). There was also a slight decline in sales growth over the course of this period, with the expansion rate falling below 20% y/y, as the poor weather conditions dissuaded customers from entering showrooms, as well as causing supply bottlenecks. However, the March data shows that there was a marked return to form during the third month of the year; this may have been a realignment to make up for the sales lost in the earlier months, or it could be evidence of the continued underlying strength of the market.

One area of the market that continues to enjoy strong growth in China is the sport utility vehicle (SUV) segment, and in March this category recorded sales growth of 48.4% y/y and 43,400 units. This can largely be explained by the rising wealth of the middle classes in China, with customers seeking to display this new-found affluence through the car they drive, in spite of rising fuel costs and a punitive tax policy for large-engined vehicles. Many of the competitors in this field have performed strongly during the past year, and this looks set to continue well into 2008 with the introduction of the Chevrolet Captiva, Kia Sportage, and Nissan X-Trail and Xiaoke, as well as the Chinese version of the Qashqai. The latter looks set to take the market by storm, although ultimately its sales will be constricted by problems in securing sufficient components for construction of the model (see China: 10 March 2008: Dongfeng Nissan Faces Constraints on Local Qashqai Production). However, SUVs still only make up less than 10% of the overall passenger car market, with sedans continuing to dominate in the main. Among the largest-selling models in this area are the VW Jetta and Santana, the latter of which is likely to see some additional growth over the next few months with the launch of the Santana 4000 and Santana Vista, while the formerly best-selling Buick Excelle is set for a heavy revamp that could return it close to the top of the charts, similar to the success enjoyed by the Honda and its eighth-generation Accord this month.

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