Vehicle purchases hitting top gear

Automakers post double-digit growth during first six months of the year

Passenger-vehicle sales in China continued their momentum with double-digit growth numbers during the first six months of the year on the back of stable economic growth, a report said on Tuesday.

According to data provided by the China Passenger Car Association, nearly 1.47 million sport utility vehicles, multipurpose vehicles and minivans were sold in China in June, a 14 percent growth from the corresponding period a year ago. The healthy growth numbers will also propel more automakers to take the sustainable growth path, the association said.

Buoyed by the healthy June numbers, passenger vehicle sales during the first six months surpassed 9 million units, a 11.4 percent year-on-year growth. Juxtaposed with the 13.87 percent annual growth in 2013, the numbers are a clear indication that the stagnancy that was prevalent in the market during 2011 and 2012 has disappeared.

The healthy first-half numbers also surpassed the industry expectations of growth between 8 and 10 percent.

"It's a signal that China's passenger vehicle sales have entered a period of stable, sustainable development and the market will maintain similar growth in the coming months," said Rao Da, secretary-general of the China Passenger Car Association. Rao said that if one were to exclude the negative impact from the FIFA World Cup and the Dragon Boat Festival without free toll policy benefits, the sales in June would have been much higher.

Moreover, "as China's real estate industry has already weakened due to the government efforts to maintain stable GDP growth, it is unlikely that there would be any curbs that are detrimental to the growth of the automobile industry," said Rao. "Thus, automakers can sit back and relax in the second half."

Rao even predicted a 15 percent year-on-year growth in July, one of the worst months for auto sales in China, as the hot summer forces many companies to suspend production for several days due to safety considerations.

However, Rao also warned that domestic automakers are still in hot water and may see further declines in market share and exports. "China is the only BRIC nation which does not have supportive policies for homegrown auto brands," he said.

Chinese consumers' preference for foreign or joint venture products, rather than domestic brands, due to quality, safety and branding considerations, has given further sales momentum to foreign automakers.

On Monday, US automaker General Motors and its joint ventures reported record sales during the first half and June in China.

Its sales in China during the first six months of this year rose by 10.5 percent from the same period in 2013 to 1,731,282 units. GM's China sales in June rose 9.1 percent to 257,798 units.

"GM has experienced resurgent growth and demand for its products across China this year, especially at the higher end of the lineup and in the SUV and MPV segment (the two fastest growing segments in China)," said Matt Tsien, executive vice-president of General Motors and president of GM China.

"We anticipate sales remaining strong through the end of 2014, as more people - particularly outside China's major cities - become first-time vehicle buyers."

EV CHARGING STANDARD DEAL SIGNED

China and Germany signed an agreement on Tuesday to use the same charging standard for electric vehicles, in hopes of accelerating the adoption of the new energy cars in the two countries.

German Chancellor Angela Merkel and Minister of Industry and Information Technology Miao Wei watched as representatives of Germany's Volkswagen, Mercedes-Benz and BMW, BYD Co Ltd, BAIC Group and Changan Automobile Group of China, and joint venture brands Denza and Zinoro all shook hands.

Under the agreement, every electric or new energy vehicle produced in one of the two countries must be equipped with the same charging plug, and the charging facilities established in the countries will all be based on the same standard.

"There's huge potential in China's electric vehicle market. The one with the biggest market share will have the say in implementing the standard," said Merkel, indicating that the landmark agreement should start a trend of having an internationally unified charging standard.

Li Gang, an official with the National Development and Reform Commission, said the Chinese government is establishing charging infrastructure, implementing a power pricing policy and encouraging the use of electric vehicles in the public sector.

"We are also planning policies to encourage innovative business models for charging facility construction and operation, and supporting private capital to enter the electric vehicle leasing, battery rental and recycling sectors," Li said.

According to Ouyang Minggao, a professor at Tsinghua University who is conducting new energy vehicle research, in recent years, sales of new energy vehicles have increased by about 100 percent annually.

He believes that "2014 is the start of the era representing new energy vehicles' wide use in the individual market. With more new models to be launched in the second half, total new energy vehicle sales are expected to reach 100,000 units by the end of the year, more than double the number of about 40,000 units last year.

"And we hope sales will double again, which will help make China realize its target of having 500,000 new energy vehicles by 2015," Ouyang said.