General Motors, Ford Motor, Nissan Motor Shines as Car Sales Continues To Surge in China

New Energy vehicles grew more than 100% in the first six months of 2016.

General Motors, Ford Motor, Nissan Motor Shines as Car Sales Continues To Surge in China

By: Abdullah Saeed Qureshi Published:

New Energy vehicles grew more than 100% in the first six months of 2016

China’s car sales in June rose 14.6% year-over-year (YoY), the fastest pace growth in the first six months, according to the data released by the China Association of Automobile Manufacturers (CAAM), earlier on Monday. About 2.07 million cars were sold in June, primarily driven by a tax breaks on car purchases.

Of the total, passenger, cars which include sedans, minivans, and sport-utility-vehicles (SUVs), stood out with a 17.7% YoY growth. In June about 1.78 million passenger cars were sold. In addition, during the January-June period about 11 million passenger cars were sold, representing a 9.2% YoY growth.

The growth in SUVs in the world’s largest auto market, after the decline last year, also played a vital role in driving up the car sales in the mainland territory. CAAM said: “SUVs and crossovers continued to lead the market. In June, over 630,000 were sold in China, 41% more than a year earlier, while sales of sedans grew 8.9% to 925,000.”

In the first six months, total vehicles sales including both buses and cars grew at a faster rate, in the world’s largest auto market. CAAM said, “In the first half, auto output and sales rose 6.47 percent and 8.14 percent year on year to 12.89 million and 12.83 million units.”

Sales in the world’s largest economy grew despite serious signs of economic slumps. In the first half of fiscal 2016, Chinese economic growth remained about 6.7%, the lowest since the global financial crisis back in 2008. Analysts also remained skeptical about China’s economic growth in the second half, which they believed will remain more or less within the same range as the first half’s.

In June, the local auto makers accomplished nearly 717,000 car sales, extending their market share to 40.2% from 38%. Similarly, sales of local SUVs reported a massive 62% YoY growth. Chinese SUVs sold in the month of June amounted to 347,000 cars, which is more than half of the total SUVs sold in the world’s largest auto market, last month.

Similarly, foreign automakers reported a significant growth last month, with General Motors Co. (NYSE:GM), leading the way. GM’s sales for the reported month amounted to 273,563 units, representing an 11.2% YoY increase. Likewise, the company’s car sales for the first six months also reported a 5.3% YoY surge when compared to a year earlier data.

GM’s China President Matt Tsien said: “Sales of the Cadillac luxury brand and Buick have remained strong throughout 2016.” In addition he also added, “We have also seen very high demand for our Baojun entry-level passenger car brand and a return to growth for the Wuling brand.”

Cadillac sales soared about 34% YoY to 9,552 units. Likewise, Buick car sales for the same month reported a 10% YoY increase About 86,054 Buick were sold last month.

Ford Motors Co (NYSE:F), car sales amounted 85,100 vehicles, representing a 3% YoY surge, while Nissan Motor Co.’s sales also surged by 17% to 109,100 vehicles.

Moreover, sales of new energy vehicles, which include pure electric, hybrid, and plug-in vehicles also reported a massive growth. According to CAAM, nearly 44,000 new energy vehicles were sold last month and in total 170,000 vehicles were sold in the first six months of 2016, representing a massive 134% YoY surge.

CAAM Deputy Secretary Yao Jie, in an official statement said: “The rapid growth of the new energy vehicle market will continue in the second half, and we forecast sales to reach nearly 700,000 for the whole of 2016.”

Analysts believe that macroeconomic factors, including lower gasoline prices, have helped increase demand. Others also opine that the consistent sales uplift in the world’s second largest economy is going to be a positive catalyst for both the Chinese economy to grow and automakers to make significant revenues.

However, other analysts also warned the companies about a persistent economic slowdown in the world’s second largest economy. Reducing a 10% tax on car purchase or giving significant discounts to buyers is just a short-term catalyst to increase the vehicles sales in China; analysts fear that in the long run, the move is not likely to bear fruit for the car makers.

They fear that the policies and government subsidies can’t go forever and once it ends; there is a potential chance that the vehicles sale in the world’s largest auto market is going to fall down.