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China 1st Half 2016: Tax cut, SUV wave spur 8% gain to record 12.8m

Baojun 560 China September 2015. Picture courtesy shwuling.comBaojun sold 320.000 units of the 560 in the past 12 months. 

* See the Top 75 All China-made brands, Top 465 models and Top 70 LCVs by clicking on the title *

Now updated with LCV data courtesy of Chinese consultancy outlet Cedars.

Faced with a declining car market, last October Chinese government cut in half the tax on cars with small engines (1.6L or less). The Chinese market never looked back since, culminating in a 18% surge in June. Over the first half of 2016, sales of light vehicles are up 9.2% to 11.042.300 units. Total vehicle sales including trucks and buses gain 8.1% to a record-breaking 12.8 million units, according to the Chinese Association of Automobile Manufacturers (CAAM). By comparison, the U.S. light vehicle market, the 2nd largest in the world, is up 1.5% to 8.644.920 deliveries.

Buick Envision China June 2016The Envision is a huge success for Buick in China. 

A very robust 2nd half could mean the government will let the tax cut expire on December 31 as planned. If that’s the case, we will witness a last-minute rush to buy small cars towards the end of the year and a disproportionately low start of 2017 – in that scenario IHS predicts Chinese growth will slow to 1.4% in 2017. For this reason, the CAAM said it is in favour of a permanent tax cit that could be viewed as a promotion of fuel-efficient cars. I am banking on the government extending the tax cut to avoid sending another wave of disruption into the market. For now, halfway through 2016 SUV sales remain the clear engine of Chinese growth with deliveries up a whopping 42% year-on-year to 3.850.000 units, while MPV get a second wind at +19% to 1.200.100 sales and sedans continue to skid at -4% to 5.565.700.

H1 2016Ch. MS/15H1 2015Ch. MS/14H1 2014Ch. MS
Total Market11,042,300/9%10,121,300/5%9,638,400/
Ch. brands4,735,00042.9%13%4,184,60041.3%15%3,651,50037.9%
Ch. SUV2,171,00056.4%53%1,417,70053.3%93%735,30040.4%
Ch. Sedans1,109,40019.9%-11%1,243,40021.5%-11%1,390,80022.6%
Ch. MPV1,087,60090.6%21%895,20088.1%19%750,40085.1%

Ch. = Chinese, Ch. MS = Chinese market share

Chinese manufacturers continue to regain the terrain they had lost in the home market in the past decade thanks to extremely strong SUV sales. Over the first 6 months of 2016, they hold a 42.9% market share of Chinese light vehicle sales, compared to 41.3% a year ago and 37.9% in 2014. Chinese SUVs gain a stunning 53% to 2.171.000 units and 56.4% share vs. 53.3% in 2015 and 40.4% in 2014. Chinese MPV also have a smile on their bonnet with deliveries up 21% leading to a 90.6% share vs. 88.1% in 2015 and 85.1% in 2014. Only Chinese sedans lag behind with volumes down 11% to 19.9% share vs. 21.5% in 2015 and 22.6% in 2014.

Buick Excelle GT VW Lavida China June 2016. Picture courtesy autohome.com.cnThe Buick Excelle GT and VW Lavida have helped GM and VAG tremendously in China this year. 

Overtaken by General Motors over the Full Year 2015, the Volkswagen Group reclaims the lead of the Chinese sales races halfway through 2016 thanks to deliveries up 6% to 1.91 million. The Volkswagen brand is up 5% to 1.44m, Audi up 6% to 290.126, Skoda up 11% to 152.000 and Porsche up 4% to 30.440. GM for its part is up 5% to 1.81m units. Buick is up 27% to become the #2 brand in the country below VW at 569.000 sales, Baojun surges 81%, Wuling is stable but Chevrolet is down 31%. Hyundai-Kia is in difficulty at -0.6% to fall just under 810.000 sales, Nissan Motor is up 4% to 609.900, Toyota Motor up 16% to 592.100, Ford Motor up 6% to 577.100 with Lincoln sales tripling to 12.450 (more than the 11.630 it sold over the Full Year 2015) and Honda up 18% to 542.500 thanks to the roaring success of the XR-V and Vezel twin crossovers. In the luxury aisle, below Audi, Mercedes soars 33% to 220.000 units, citing up on BMW up 7% to 247.600. Note the above figures include imports – which is not the case in the sales tables below the jump.

Haval H6 Coupe China June 2016The Haval H6 remains the best-selling SUV in China – Coupe variant pictured. 

Looking at homegrown brands – figures don’t include commercial vehicles, Changan is up 8% but drops one spot to #3 at 563.900 units, Haval gains a solid 22% to break into the Top 10 at #9 and 378.700 units, Beijing Auto is up 51% to #11, Dongfeng up 15% to #12, Geely up 10% to #15 and JAC up 17% #18. Below, the brands that gain spectacular ground all do so thanks to new SUV offerings: GAC Trumpchi is up 170%, Zotye up 49%, Brilliance up 46%, Roewe up 74%, Soueast up 81%, Leopaard up 433% and Landwind up 236%.

Wuling Hongguang S1 China June 2016Still the one: the Wuling Hongguang is the #1 vehicle in China but drops 6%

Model-wise, the Wuling Hongguang remains the best-selling vehicle in the country despite sales down 6% to 294.300, but is now under intense pressure from the VW Lavida, up a fantastic 23% to 287.400. The Haval H6 does even better, lifted by the success of the Coupe variant up 40% to 240.300. Just below, a string of high-performing sedans contradict the overall trend: the VW Jetta (+16%), Sagitar (+27%), Buick Excelle GT (+54%) and Toyota Corolla (+35%) all frankly outpace the market. Just over one year old, the GAC Trumpchi GS4 lands inside the Top 10 thanks to 150.800 deliveries. The Buick Envision (#14), Dongfeng Fengguang 330/370 (+30%), Honda CR-V (+38%), XR-V (+61%) and Vezel (+44%) and Toyota Levin (+32%) also shine inside the Top 50.

GAC Trumpchi GS4 China June 2016. Picture courtesy rednet.cnThe GAC Trumpchi GS4 is now among the 10 most popular vehicles in China. 

But the most impressive performance is without a doubt delivered by the Baojun 560, landing directly in 4th position overall with nearly 175.000 sales so far in 2016. Launched in July 2015, Baojun has sold an earth-shattering 320.000 copies of the 560 in just 12 months, beating the brand’s previous launch (the 730) to snap the title of most successful new nameplate launch in the history of automobile in China. The Baojun 560 is the fastest nameplate to reach its first 300.000 units: it did so in just 11 months (301.534) vs. 13 for the Baojun 730. It leads a strong contingent of 72 new China-made nameplates having made their first appearance in the Chinese charts over the past 12 months. So far in 2016, the Changan Oushang, Hyundai Elantra Lingdong, Jeep Cherokee, BAIC Huansu H3, Zotye Damai X5, BAIC Senova X25, Nissan Lannia, Soueast DX7 and Roewe 360 have been the most successful. It’s also worth mentioning the Buick Verano, new Hyundai Tucson and Brilliance V3, each just over one year old but already inside the Top 50.

Dongfeng Rich China June 2016Dongfeng Rich – Chinese pickups are back in the game. 

Stepping into the Light Commercial Vehicle market, a few momentous shifts are at play. In an overall market contracting 12% to 1.695.351 units, minivans are fast falling into oblivion at -36% to 304.019, with part of this lost volume recuperated by mini trucks (the pickup equivalent of these minivans), up 14% to 246.315. The big news however is the return to grace of pickups up 4% to 169.510 (and surging 36% in June), helped by a change in legislation allowing them in the large cities of four provinces for the first time in 12 years (click here for more detail). The Foton Light Truck is in the lead despite sales down 6% to 126.856 ahead of the Wuling Mini Truck (+6%) and Hongguang V (-17%). The Wuling Sunshine (-33%), Rongguang (-35%) and Chana Star Minibus (-40%) implode, and the Great Wall Wingle 5 leads the pickup charge above the JMC Baodian, ZX Auto Grand Tiger and Dongfeng Rich.

Used-vehicle sales don’t traditionally make it to BSCB headlines but in the case of China it is a very important element to help understand the largest market in the world. The used-car market in China is still nascent as an overwhelming majority of new car buyers purchase their very first car, and the trust required to purchase a second-hand car isn’t supported yet by a clear and official network of resellers. In this context, the used car market in China unsurprisingly grows slower than the new car market in 2016, at +4% to 4.7 million units over the first half of the year. Interestingly, microvans are the fastest-growing segment just as they disappear from the new car charts: they are up 77% to 276.909 units, while used MPVs are up 35% to 236.700, SUVs are up 31% to 298.000 and sedans up 5% to 2.871.500 according to the China Automobile Dealers Association. Used buses are down 15% to 514.500 and used trucks down 10% to 486.000. The CADA forecast a used vehicle market up 6% to 10 million units over the full year 2016.

Previous post (1): China June 2016: Market up 18%, next wave of Chinese SUVs arrives

Previous post (2): China LCV June 2016: Pickup sales surge 36%

One year ago: China 1st Half 2015: Domestic carmakers regain ground in shy market

Full H1 2016 Top 75 All China-made brands, Top 465 models and Top 70 LCVs vs. Full H1 2015 figures below.

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