China In February: Up 46 Percent

Bertel Schmitt
by Bertel Schmitt
china in february up 46 percent

Chinese bought 46 percent more cars this February than in February 2009. This according to official data by the China Association of Auto Manufactures (CAAM), as reported by China’s state news agency Xinhua.

The avid TTAC reader is not surprised. A week ago, we predicted numbers along these lines, simply by looking at GM China’s February sales report. Amongst observers of the Chinese market, GM sales (all of them, including Wuling) have turned into a reliable leading indicator. A dubious honor: GM China usually is only a few percent ahead of the market, which doesn’t translate into a rapid gain of market share. This month is not much different: GM China’s February sales rose 51 percent from a year earlier, only 5 percent ahead of the market.

Aficionados of the Chinese bubble theory are now on their feet, shouting “I told you so!” Sales in January had shot up by 115.5 percent. In February, the growth was less than half. Obviously, the bubble must be bursting. No so fast.

One needs to study the oddities of the Chinese calendar before jumping to conclusions. Sit down while I explain. There is something called “Chinese New Year.” Think of it as if Thanksgiving, Christmas, Valentine’s Day and Fourth of July would all fall in the same month. China is pretty much shut down for that month. (There was a reason why I reported from Tokyo for most of February.) Sales shoot up before the holidays. And then everything comes to a halt. The Chinese don’t have the sophistication of adjusting a SAAR to selling days, they just know their calendar: Last year, Chinese New Year was in January, this year, it was in February. So numbers must be seen in aggregate.

Says Xinhua: “The combined auto sales in January and February surged 84 percent from a year earlier to 2.9 million units.” Now, that’s a healthy number for two months.

All eyes are on the following months. Last year, Chinese auto sales were amongst the first to shake off carmageddon. They started to grow in earnest in March 2009. By the end of 2009, sales had risen 45 percent to 13.6 million units, according to CAAM, and China was officially the world’s largest car market and car producer. Compared to these strong months (sales in November and December 2009 rose more than 90 percent,) any further monthly growth will look small. But even if China grows at a (for China) moderate rate of 20 percent, this would translate into more than 16m units by the end of 2010.

No report of Chinese sales numbers can be complete without a reference to China’s governmental sales incentives. Compared to the money that had and is been thrown around in other countries, the Chinese incentives were rather benign. The sales tax for cars below 1.6 liters was halved from 10 percent to 5 percent. Big deal: A new QQ goes for as little as $4.100. So instead of paying $410 in tax, the tax was $205. Also, it is often forgotten (or intentionally omitted) that the tax for bigger bore vehicles was doubled from 10 percent to 20 percent – which didn’t seem to subdue China’s appetite for Mercedes-Benz or BMW. This year, the tax for sub 1.6 liter cars did go up to 7.5 percent – again with no effect.

If you want to collect the mother of all subsidies in China, then wait for the impending announcement of a governmental contribution of up to 60,000 yuan (US$8,797) towards the purchase of a “new energy” vehicle. Shanghai Daily reports that “China wants to have 500,000 green cars rolling on the streets within three years while improving infrastructure, such as recharging stations, for these vehicles.” Li Yizhong, Minister of Industry And Information Technology, said that “Without government support, it would be difficult for Chinese families to buy new energy vehicles.” Not necessarily difficult, but the price premium of a hybrid over a regular car is around 50 percent, and that’s too much to stomach for a Chinese who likes a good deal.

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3 of 19 comments
  • INeon INeon on Mar 10, 2010

    I understand the male need for frail, powerless women --quite well-- but she is a missed meal away from hospitalization.

  • Shaker Shaker on Mar 10, 2010

    I'll protect her! (and give her a cheeseburger as well).

    • PrincipalDan PrincipalDan on Mar 10, 2010

      She might need you to carry her after she breaks her ankle getting out of that car! The angle on the right leg looks painful!

  • Ajla From what I can see in the NHTSA data nontire part failures make up about .5% of reported crashes and aren't listed as a cause in the fatal accident reports. While we've all seen hoopties rolling around I'm guessing they don't go far or fast enough for many negative outcomes to occur from their operation.While I wouldn't want to be in that .5% I'd also want to avoid a "Bear Patrol" situation. When it comes to road safety nontire part failures are more like animal attacks while aggressive or impaired driving are heart disease and cancer.
  • Art Vandelay On the right spec truck, that is a screaming bargain for the price. And you can buy it safe knowing that as it is a Ford you'll never have your vehicle's good name sullied by seeing EBFlex and Tassos puffing each other's peters in one...a nice bonus to the horsepower!
  • Art Vandelay Too small for Tassos and EBFlex to puff each other's peters in.
  • Spookiness I can see revising requirements for newer vehicles, like 3 years, but not for older. I live in a state with safety inspections next to a state without, within a common metro-area commute "shed." Besides the fact that the non-inspection state has a lot of criminals to begin with, they're poorer, less educated, have a lot of paper-tag shady dealers, very lax law enforcement of any kind, and not much of a culture of car maintenance. It's all of their janky hoopties dead or burning on the side of the road every mile that farks up the commute for the rest of us. Having a car inspected just once a year is a minimal price of civilization, and at least is some basic defense against some of the brake-less, rusted-out heaps that show up on YouTubes "Just Rolled In."
  • Pippin Republicans Senators - "We refuse to support your nomination because you don't have a background in traffic safety! That's the priority!"Biden nominates someone with a background in traffic safetyRepublican Senators - "This new nominee is totally unacceptable! They're in favor of new regulations to improve traffic safety! We need big government out of (men's) lives!"