By on February 8, 2012

New car sales in China imploded in January. This will be the message when the official data by the CAAM are announced. Which should happen any minute.

The signs are ominous: Yesterday, GM China, TTAC’s in-house leading indicator, announced (in a way) that sales in January had been down by 8 percent. Then, China’s largest carmaker SAIC said that its January was down 8.5 percent. Today, the China Passenger Car Association told China Daily that the car market in China had nosedived16.5 percent from a year earlier to 1.17 million units in January. Late in the afternoon in Yokohama at Nissan’s quarterly earnings conference, Nissan’s Corporate Vice President, Joji Tagawa proudly pronounced that Nissan sales “declined only 16 percent” in China, while the Chinese car market as a whole registered “a negative 28 percent,” and isn’t that wonderful?

Whoa!!!! What’s going on?

Is the sky over China finally falling? It sure looks like it. Unless you are one of the 1.3+ billion chosen few who own a Chinese calendar. Then you would know that for the better part of January, China was closed.

It happens every year. A phenomenon called Chinese New Year causes hundreds of millions to travel, to set off fireworks, and to paralyze commerce for weeks on end. Officially, Chinese New Year started on January 23 2012 and lasted a week. Unofficially, it can last a month. Picture Thanksgiving, Christmas, Easter, Hanukkah and Ramadan all rolled into one, and you’d be covering only a tiny part of what is Chinese New Year.

Now comes the really interesting part: Last year, Chinese New Year fell into February. With the result that February 2011 was a dud, car-wise, after January had been stellar.  This time around, we compare an emaciated January with a prior year January on steroids. Next month, it will be different, when sales will be compared to the dud month in the prior year. Which causes Rao Da, secretary-general of the passenger car association to glibly remark that he expects an increase of around 30 percent in February.

All I can recommend: Ignore any numbers coming from China in January or February, especially percentages.

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14 Comments on “China Implodes! Someone Call Glenn Beck!...”


  • avatar

    Oh this will be fun to watch. Didn’t we go through this last year too?

  • avatar

    Wahaha! Seasonality based on the lunar calendar! Well spotted. And may I add a very Happy Year of the Almighty Dragon to fellow Chinese calendar owners :p Gong Xi Fa Cai (as the Gregorian Calendar readers would say)

  • avatar
    vbofw

    Not sure I get this. Is somebody in the automotive press truly reporting Chinese car sales are slowing structurally because of the January numbers? Every article I have read clearly notes the strange seasonality that is causing the decline.

    GM said January had 3 fewer selling days than January 2010. So 3 fewer selling days should create a 10% reduction [=3/30]. But sales were down only 8%. Therefore seasonally adjusted sales are up 2% in approximate terms.

  • avatar
    TonyJZX

    i wonder how reasonable this assumption is given the explosive growth last year…

    let me give you an example:

    2009 -08%
    2010 +49%
    2011 +78%
    2012 -16%

    I made these figures up of course but we all know that China saw stupid growth often up to 99% for a month

    so we’re seeing 16% drop after a 78% rise? wouldn’t that be considered ok?

  • avatar
    skor

    I agree, the analysts are nitwits, who don’t seem to understand a thing about anyone’s culture. On the other hand, I really doubt the Chinese authorities will allow the Chinese people’s mania for car ownership to continue much longer. Currently China needs to import half its oil. Trying to replicate America’s car culture is a dead end for China, and the people running the show in China know it….hell, it’s a dead end for the United States.

    My guess is that auto ownership in China will take the pattern of large lawn ornaments intended to convey status, with very little actual driving involved. Once the market is saturated, there will be much less demand to replace autos based on things breaking or wearing out. So yes, Chinese cars sales will continue their monstrous growth for the near future until the market is saturated and then it wouldn’t level off but crash, that or when the Chinese government decides it’s enough and hits the kill switch.

    • 0 avatar

      That’s why there’s been a push by the Chinese government for so-called “new-energy vehicles,” although it doesn’t look like it’s been working very well.

      About 5.7k electric cars were sold in China, which is good for about 0.03% market share. At least they beat the 2.7k hybrids.

    • 0 avatar
      silverkris

      The other thing is that in many parts of China, authorities have been trying to put a brake on vehicle registrations due to increasing traffic congestion. Beijing has a lottery system for license tags, for example. I can see something of a policy (if it hasn’t already been done) that requires a would-be car owner to get a chit for a registration – kin to Singapore’s COE (certificate of entitlement).

  • avatar
    vbofw

    the other big issue here is that the government essentially controls car purchases. Last year there was stimulus like incentives on small cars. additionally they limit the number of registrations issued in the big cities. So this has less to do with true demand for china autos, and more to do about what the mother ship will allow.

    • 0 avatar
      MrWhopee

      Exactly. The Chinese economy is very controlled by its government. In the previous years, the government were very friendly towards car purchases. Now they seem to want to restrict car purchases, having experienced an explosion of cars that clogged its infrastructure. So car purchases naturally goes down.

      • 0 avatar
        skor

        Yup, and like I said, I doubt very much that the Chinese government is going to sink very much money into a car based infrastructure that they know is not sustainable in the long run.

  • avatar
    MusicMachine

    I listen to everything Beck says b/c he wears a Mr. Rogers sweater and hip glasses.

    • 0 avatar
      Brock

      I am the complete oposite. I don’t listen to him because he wears the sweater. What he is saying doesn’t really matter. He doesn’t meet my fashion standards, and that is that.

  • avatar
    rpn453

    Don’t feel threatened by Chinpokomon toy, Mr. Beck. We are very simple people with very small penis. We cannot achieve so much with such small penis, but you American wow, penis so big, so big penis!

  • avatar

    It is fun watching Glenn Beck even knowing that he exaggerate things. But if you do not do that nobody will pay attention. I am forced to celebrate Chinese New Year, report to Chinese boss and go to cheap Chinese restaurants at work no matter how much I hate it. But Chinese also forced to celebrate Western New Year, speak English and adopt American culture. China certainly will go through their own Great Depression at certain time in future. China and Japan are getting Westernized and not in the good way.

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