May brings joy to car companies

A model stands next to a Ford Motor Co vehicle at an auto show in Chongqing on June 6.The company's sales in China surged 32 percent year-on-year to 93,323 units in May. Provided to China Daily

Passenger vehicle sales in China near 1.6m units, highest rate this year

China's passenger vehicle sales accelerated in May with the highest monthly rate this year, indicating further growth in the domestic market this year.

On Tuesday, the China Association of Automobile Manufacturers reported that sales in May were up 8.50 percent from a year earlier, after dipping 4.64 percent from the previous month, as overall sales reached 1.91 million units.

The nation sold 1.59 million passenger vehicles in May, representing robust 13.85 percent year-on-year growth, the association said.

Total sales of 8.07 million passenger vehicles were recorded in the first five months, with 11.13 percent annual growth, a remarkable recovery from near stagnancy the previous two years.

Multipurpose vehicles and sport utility vehicles maintained their leadership in the increase, with 56.36 percent and 37.54 percent annual growth from January to May, and sedan sales jumped 5.38 percent from a year earlier, according to the association.

"The strong sales demand in May can be attributed to the enthusiasm brought by the Beijing auto show in April, which introduced hundreds of new models to local consumers," said Rao Da, secretary-general of the China Passenger Car Association.

"The panic consumption from more cities' limiting vehicle purchases and the cooling real estate market also helped maintain the trend and will support it in the following months," he said.

But the strong demand mainly benefited foreign automakers while the homegrown brands are still facing challenges in the domestic market.

Statistics from CAAM showed that in May, Chinese brands' combined market share in the passenger vehicle segment continued its downtrend, with a 2.92 percentage point drop from last year, though their sales of 580,600 units still accounted for 36.51 percent of the segment.

Their market share in the first five months dropped 3.83 percentage points over the previous year.

US automaker General Motors and its joint ventures sold a record 276,109 vehicles in China in May, with year-on-year growth of 9.2 percent. Shanghai GM and SAIC-GM-Wuling, as well as their Buick, Chevrolet, Cadillac and Wuling brands, also reached new highs for May sales. In addition, Shanghai GM's total sales surpassed 9 million units for the first time since the joint venture was launched in 1997.

Fellow US brand Ford Motor Co's sales in China surged 32 percent year-on-year to 93,323 units in May.

Analysts said more discerning Chinese consumers helped foreign automakers. The booming luxury vehicle segment was an example, as Chinese automakers can hardly compete in the sector.

"The foreign luxury brands seem to appeal to young Chinese buyers as they perceive them as safer, more technologically advanced and of better quality," said Wilson Liu, China Automotive leader of PricewaterhouseCoopers.

"On the other hand, a trend of overall vehicle downsizing amid more stringent emissions standards is also reflected in the luxury segment. To meet these regulations, entry-level models are increasingly available and appeal to younger, first-time buyers," Liu said.

The consulting firm found that in the past decade, the China market expanded nearly fivefold, from 4.3 million vehicles to 19.9 million. Luxury vehicles have seen particularly impressive growth.

PwC estimated that luxury vehicles will have a compound annual growth rate of 11.5 percent from 2013 to 2020, which is almost double that of non-premium light vehicles.

The Chinese market is predicted to surpass the average luxury penetration rate of 10 percent in mature markets like the US to reach more than 3 million units by 2020.