Chinese Car Sales Explode by 70 Percent

Bertel Schmitt
by Bertel Schmitt

China’s auto sales are redlining. First to recover from carmageddon China had jumped into double digit growth territory in February and never looked back. Months after month, the increases became bigger. Now, they explode.

In July, China registered the biggest gain since January 2006, passenger vehicles up 70.5 percent, overall vehicle sales up 64 percent. Double digit growth has solidly returned to China.

“Sales in the second half will continue to be strong, even if there’s a slight slowdown in growth rates,” said Ricon Xia, an analyst at Daiwa Research Institute in Shanghai via Gasgoo. “Not only has demand for small cars been good, bigger vehicles have started to recover as well.” Cash for Clunkers notwithstanding, with numbers like these, China will easily outdistance the USA as the world’s largest car market in 2009.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Baldheadeddork Baldheadeddork on Aug 10, 2009

    It might be a good idea to use a lot of caution when looking at economic data from China. Barry Ritholtz highlighted a piece last week from a former Morgan Stanley analyst exposing some huge fault lines in China's economy. Unrest in China is my top pick to be the big economic story in 2010.

  • Bertel Schmitt Bertel Schmitt on Aug 10, 2009

    slumba: Wasn’t there some kind of reduction in tax rates on vehicle purchases, that goosed the market? I seem to recall reading that the regular tax of 40% of the car’s value had been reduced. You are ill-informed. A little googling would solve it. Changes in Chinese car purchase tax rates can be found here . Cars less than 1 liter displacement are taxed at 1 % instead of 3%. A car like that can be had for 4000$, so you pay 40$ instead of 120$. Big deal. Taxes on cars with engines of more than 4 liters doubled from 20% to 40%. It wasn't reduced. It was doubled.

  • Bertel Schmitt Bertel Schmitt on Aug 10, 2009

    baldheadeddork : The former Morgan Stanley analyst is most likely a former Morgan Stanley analyst for a reason. First off, he doesn't point out huge fault lines in the Chinese economy. He's talking about a stock market and real estate bubble. If there's a stock market bubble in China, then there is one in the US also. Simply overlay the Shanghai index with the Dow and the S&P 500 and ye shall see. There was a Chinese bubble in late 2007, when the Shanghai index was above 6000. Without creating a hue and cry, it steadily degenerated to 1760 in November 2008. Ever since, it recovered to the 3000 area. It has a long ways to go until it hits bubble territory. The Dow and the S&P likewise recovered. Where are the big Chinese fault lines? Real estate bubble? I see none. I'm in overbuilt Beijing where buildings are empty and where lots of unfinished buildings are standing around. Their developers ran out of money. Chinese real estate is something to stay away from anyway. In real estate, buildings depreciate, land appreciates. In China, the government owns the land. You buy a 75 year lease. The latest comments of Savills, a big real estate broker in China, is: "Despite recent optimism, however, a significant volume of supply in the second half of the year is expected to maintain pressure on rents and occupancy rates for at least the next six months." If a broker talks like this, it's SELL, SELL, SELL The doozie is the statement "When the dollar becomes strong again, liquidity could leave China sufficiently to pop the bubble. " If that holds true, then the Chinese "bubble" has a long ways to go. The dollar shows no signs of turning around. My prediction is it will get seriously weak, due to US deficit spending. Even the former Morgan Stanley analyst doesn't see the dollar getting strong again before 2012 ... In any case, I don't know what this has to do with cars or social unrest.

  • Ttacgreg Ttacgreg on Aug 10, 2009

    This story increases my concern for how much sooner and how much more challenging global post peak oil production realities are going to be.