Our patent pending GM China sales oracle saw it coming: GM China was down in April, therefore, the whole Chinese market had to be down in April. And so it was – by a hair: April new vehicle sales in China were down 0.25 percent, the China Association of Automobile Manufacturers announced at a press conference on Tuesday afternoon. This is the first decline in 27 months.
1.55 million units changed hand is April. 1.14 million units were passenger vehicles. That part of the industry is up 2.79 percent. Only 409,700 commercial vehicles were sold in April, down 7.84 percent.
This trend had also been indicated by our GM China sales oracle: While GM China’s passenger vehicle sales were up, its commercial sales were way down. With half of its volume commercial, GM China has a much higher exposure to the slow selling “breadvans”. This is reflected in the fact that GM China was down 4.6 percent in April, while the total market was down only 0.25 percent.
A lot of people are concerned about the Chinese economy, some even genuinely. They are looking in all the wrong places. They should look at commercial vehicle sales. These are usually regarded as a leading indicator of economic vitality. When truck sales go up, it’s because economic growth goes up. Then, car sales follow as a lagging indicator. The reverse is also true. Trucks are bought when they are needed, and avoided when they are not needed. Commercial sales have been weak for several months now in China. A loss of nearly 8 percent in the commercial department is a cause for concern.
At the press conference, the usual suspects were fingered as responsible for the decline: The cancelled incentives – and of course the supply chain interruptions from Japan. “We still can’t get detailed reports from Japan about the parts disruption, so we need more time to estimate the earthquake’s impact on China’s auto industry, but we did get reports from all Japan car makers about their production suspension in China,” said Secretary General Dong Yang. From what I am hearing, impact of the Japanese parts paralysis on Chinese production had been relatively minor.
In the January-April period, overall auto sales grew 5.95 percent from a year earlier to 6.53 million units, while passenger vehicles sales rose 7.55 percent to 4.99 million units.
4 months into the year, Dong Yang opined that annual growth could be less than the 10 to15 percent previously envisaged.