By on August 11, 2011

From the Detroit News all the way to the Miami Herald, you will receive the good news that “China’s July auto sales are up 6.7 percent.” They are not. According to data released by the China Association of Automobile Manufacturers (CAAM), automobile production in China rose 1.26 percent in July to 1,306,100. Sales rose 2.18 percent to 1,275,300. In case you don’t read Chinese, China Daily provides a translation. The numerical crime was perpetrated again by the Associated Press. The AP is a repeat offender.

If I would have anything to say, I would revoke APs right to report on anything that has to do with car sales, especially in China. The AP did not accept our offer of a free remedial course in car counting. Instead of honing the fine art of copying correct counts from a press release, the AP continues to write what I should have a monopoly on, namely BS.  A grizzled editor once told me: “If you find that the other guys are consistently wrong about something you know – assume they are wrong with everything else also.”

(To AP’s credit, they write further down that “Total sales of commercial and passenger vehicles rose 2.2 percent from a year ago to 1.3 million units.” But that will slip past most readers whose eyes glazed over in the first paragraph – if they ever got that far. Distracted reading is a menace.)

Time and again, the AP (along with other less seasoned writers) falls into the trap of confusing “autos”, “vehicles”, “cars” and “passenger vehicles.” What was up 6.74 percent were the sales of “passenger vehicles” (as defined by the CAAM, let’s not even go THERE). Commercial vehicle production was down 9.26 percent to  255,700. Sales of commercial vehicles plummeted a whopping 19.36 percent to 263,500 in July.

In aggregate, and I strongly recommend to use the aggregate to transcend Chinese car numerology, by adding 2.18 percent to last year’s July, the market moved sideways with a slight upward bias. Last week, we predicted: “When Chinese new car sales will be announced next week on Wednesday, you probably will see a meek number.” There is your meek number. Your always no-cost advisors predicted: “Passenger vehicle sales grow. Commercial vehicle sales are down.”

Overall, the Chinese car market is alive and well. It went from a furious boil last year to a slow simmer, but it is still hot. From January to July, auto production (all types) rose 2.33 percent to 10,462,400. Sales  rose 3.22 percent to 10,601,800.  Last year, the market was insanely up. This year, it’s just up. In the remaining months of the year, sales are expected to increase slightly.  By the end of the year, China may break through the Mach 2 barrier of auto production and reach 20 million. Or it will end the year just shy of it.

One thing is clear: The bubble which was predicted (or prayed for) by many, including the alleged China expert and all-around moron Gordon G. Chang, is not happening.

Get used to it: China’s mass motorization has just begun. There are 73 “automobiles” per thousand people in China. There are approximately 47 passenger vehicles per thousand in China. Even a poor country like Poland already has 450 cars per thousand.  Even if China will never reach the exalted levels of Poland, there remains  a lot of room to grow. (When trying to prove me wrong, please stay away from thoroughly inebriated “sources” such as Nationmaster, which claims that  there are 765 cars per 100 people living in the U.S. – that’s 7.65 cars for each man, woman, child, convict and homeless.)

There is one thing you can trust: China’s car sales will continue to grow. Just don’t trust the numbers you read. Especially when they come from the Associated Depress.



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