Ooops. Time to send our patent-pending TTAC China sales oracle on vacation. Send the China Automotive Technology & Research Center (and Bloomberg) right with them. The China Association of Automobile Manufacturers (CAAM) has given the official word on Chinese car sales in July 2010. And they are down. Way down.
China’s car sales in July crawled along at a snail’s pace not seen since the bad old days in March 2009. Sales of passenger-cars rose 13.6 percent from a year earlier to 946,200 units in July, according to a statement which the CAAM emailed to China Daily. Total Vehicle sales in July gained 14.4 percent to 1.24 million units.
Of course, that’s not down. Growth is growth. Especially as compared with the crazy days of July 2009, when sales in China went ballistic by 70 percent. As we said last week: Any growth that betters these numbers is amazing. But this is China, and China gets the shakes when growth numbers aren’t at least borderline insane.
Against this backdrop, GM China’s July results (up 22.2 percent to 176,645 vehicles) are simply amazing. This also confused our sales oracle, which was given a Valium and sent to Bangkok for some R&R. It needs it. The actual, real number is lower than what the usually pessimistic China Automotive Technology & Research Center (CARC) had predicted. They had passenger vehicles at 15.4 percent , and all vehicles at 17 percent plus in July. Wrong.
The real number will cause some serious head-scratching. Shameless Bloomberg has conveniently forgotten its boo-boo and crows that “Even as growth slows, inventory of unsold vehicles is building as inflation erodes disposable incomes in the world’s biggest auto market and reduces consumers’ appetite for new cars.” Bloomberg says that “Sales may begin shrinking as early as September, according to the Daiwa Institute of Research.” Duh, Einsteins. Sales could shrink as early as August. It compares with an August 2009 when sales had doubled.
What is true is that the Chinese market is cooling off a bit. July was a bit strange. As reported a few days ago, China’s government introduced subsidies for fuel-efficient models in July, and as a result, sales of fuel-efficient compact cars dropped. “Many people appear reluctant to buy now in the hope that even bigger discounts will be introduced in the future,” wrote The Nikkei [sub]. When dealers raise prices, there probably will be a run on the dealerships. Only in China.
Said Sheng Ye, associate research director at industry consultancy Ipsos: “Auto sales have always been slow in the summer. But an extraordinary strong 2009 and worries of about the economy are also to blame. We might see more traffic at showrooms by autumn, but it won’t be anything close to the packed showrooms and explosive sales we saw in 2009.”
And guess what’s really driving them nuts? Sales at perennial rival India are at an all time high. Car sales in India jumped 38 percent to a record 158,764 units in July, compared with a 30.8 percent gain in June, says Reuters.