In the (OMG) 7 years I have lived and worked in China by now, I have learned not to take the first two months of the year all too seriously. After all, according to the Chinese calendar, the first two months mostly belong to the old year. Chinese New Year is some time in late January or early February, depending on the inscrutable lunar calendar. The nearly month long festivities mess up sales, and make comparisons pretty much useless. Confucius say: “Only the stupidest of men make predictions based on January sales.”
March is a different matter. It’s the first “regular” month of the new year. Everybody is waiting for March sales results in China. We’ll have to wait at least a week or so until the CAAM is done tabulating the sales of the 60 to 120 automakers in China (even that number remains shrouded in mystery.) But there is our trusted indicator: GM China.
GM reports “new domestic sales records for the month of March and the first quarter of the year.” The real numbers are less dramatic than the headline. In the first quarter of the year (according to the Western calendar), GM sales in China rose to 685,583 units, up 10.0 percent from a breathtaking first quarter in 2010. Confucius say: “When looking at growth numbers, always look at the prior year period first.”
GM China’s growth rate in March was … wait a minute, GM’s press release abandons the time-pressed journo on that one, banking (not without reason) on the laziness and inability to calculate percentages. Oh, well. Off to the archives. March 2010 sales were 230,048 units. GM China’s March 2011 sales totaled 233,014 units. According to TTAC’s abacus, that’s a growth of a whopping 1.29 percent. No wonder that’s being kept under wraps.
No abacus needed for “GM’s flagship joint venture, Shanghai GM.” According to the press release, it “sold 99,589 vehicles in China in March, an increase of 14.5 percent year on year and a record for the month.”
Moving on to “SAIC-GM-Wuling, GM’s mini-commercial vehicle joint venture,” the release makes us work again. It only discloses “domestic sales of 125,247 vehicles in March.” No percentages. Off to the dusty archives we go. In March 2010, Wuling had sales of 129,489 units. Our abacus calls that a loss of 3.28 percent. No wonder they tried to hide THAT.
GM China’s 2011 March, compared to the March of last year
As goes GM, so goes the Chinese nation. In February, GM was up 5.8 percent, and the overall market was up 4.57 percent. Looking at the new GM numbers, the overall market might show zero growth, or even a small decline for March.
GM’s losses at Wuling presage losses in the small displacement market, which is dominated by Chinese brands. GM’s gains in the upper segments presage a healthy future for the larger displacement joint venture makes.
In that vein, Toyota just announced (via Reuters) that its sales in China rose 37.4 percent in March to 84,000 units, and 16.3 percent in the first quarter to 208,000 units. Don’t think Toyota is insignificant in the Chinese market. As brands go, Toyota is #3 behind Volkswagen and Hyundai, says J.D. Power in their monthly Executive Summary. Then comes Nissan in #4, followed by Chevrolet and Buick in #5 and #6. Let’s see what the other majors report within the next few days, and we will have a pretty good grip on the market.
If the overall Chinese market comes in with only a tiny gain or a slight loss, undoubtedly the end of the huge Chinese growth will be announced. Confucius say: “Those who get ahead of themselves will stumble in their own footsteps.” Once the pull forward effect that had brought huge gains last November, and December has worked itself out of the market, China will be back in the double digits, albeit low double digits. Keep in mind: 18.06 million last year plus a sedate 15 percent growth would mean nearly 21 million this year.
J.D. Power’s “forecast for this year and the following years remains unchanged as we believe China’s economy will continue to develop and the strong demand in the inland cities will continue.” The Shanghai based firm thinks that “strong momentum will continue and double-digit growth is still expected.”
In a way, that good forecast is not good for China. As J.D. Power’s data show, the Chinese market is highly fractionalized. 20 brands make for 67.3 percent of the passenger vehicle market. Volkswagen, itself spread across two joint ventures, holds the top spot with 12.8 percent. A large pack of the following field has between 5 and 6 percent market share. 32.7 percent of the market are spread across a huge number of largely unknown automakers. The size of this number is equally unknown.
What China needs is a drastic treatment of six months of double digit losses, which would cause a surrender of the smaller players and will lead to 10 or 15 larger and more competitive players. However, these six months of double digit losses are nowhere near on the horizon.
J.D. Power: China’s leading passenger vehicle brands
|Total Passenger Vehicles||813,753||9%||2,153,405||16%||67.3%|
J.D. Power: China’s leading commercial vehicle brands
|Total Commercial Vehicles||395,551||1%||899,480||3%||32.7%|