China Car Sales Projected to Hit 20 Mil. in 2012

China's Favorite: GM was China's top carmaker during 2011, selling 2.55 million units.

China’s auto production and sales are expected to resume normal growth levels in 2012 after a surprisingly weak market in 2011 following two years of breakneck growth in 2009 and 2010.

Based on the sales forecast of more than 20 carmakers and the estimates of auto industry marketing executives and the nation’s economic trends, the China Association of Automobile Manufacturers (CAAM) is forecasting an 8% growth in sales during 2012 for a total of 20 million units. By contrast the US auto market is projected to grow to 13.4 million units in 2012, up about 6.5% from the 12.6 million units sold in 2011.

Passenger cars are expected to account for 14,472,400 units for a growth of about 9.5% while commercial vehicle sales are expected to grow 2% to 4,032,700 units.

The growth rate will be much higher than for 2011. Production and sales for last year saw increases of only 0.84% and 2.45%, respectively, to 18,418,900 units and 18,505,100 units. Those growth rates were the lowest in 13 years and 31.60 and 29.92 percentage points lower than the growth rates for 2010 according to the latest production and sales statistics published by CAAM.

The industry sees five favorable factors for auto sales growth in China this year: the stable growth of the macro economy; more consumer choices due to the evolution of the market, and the diversification, size reduction, and energy conservation of products; rising consumer confidence in the auto market due to government policies encouraging expansion of domestic demand, rising income, and expanding social security coverage; a rising demand for auto consumption as more Chinese continue to enter the middle class; the opening of overseas market for Chinese automobiles as they become more competitive internationally in quality.

Four factors are seen slowing the auto industry’s growth rate, including a slowing global economy, a larger installed base of autos, the rising cost of operating cars and rising trade barriers, according to CAAM.

“The dramatic slowdown of the growth of the production and sales of automobiles in last year is mainly due to four factors: national macro control, termination of incentive policy, large base number in last year, and purchase restriction in Beijing and other cities,” said Dong Yang, CAAM’s standing vice chairman and secretary.

In 2011 6,112,200 of the vehicles sold in China were domestic-brand passenger vehicles, a decline of 2.56% compared with the same period in last year and accounting for 42.23% of all passenger vehicle sales, representing 3.37% less market share than in 2010. Sedans accounted for 2,946,400, a growth of 0.46% and accounting for 29.11% of all sedan sales, 1.78 percentage points lower than 2010.

In 2011 the top 10 sedans manufacturers in terms of sales volume are: Shanghai GM (which sold 2.55 million units in China), Shanghai Volkswagen, FAW Volkswagen, Dongfeng Nissan, Beijing Hyundai, Chery, Geely, Changan Ford, Dongfeng Peugeot Citroen and FAW Toyota. In 2010 the top 10 sedans manufacturers were Shanghai Volkswagen, Shanghai GM, FAW Volkswagen, Chery, Beijing Hyundai, BYD, Dongfeng Nissan, Geely, FAW Toyota, and Changan Ford. During the intervening year BYD dropped out of the top 10 and Chery’s ranking slipped from number 4 to number 7.

Luxury joint-venture brands fared especially well. Dongfeng Nissan, Shanghai GM, FAW Volkswagen and Shanghai Volkswagen enjoyed growth rates of, respectively, 18.18%, 16.54%, 16.57%, and 10.62%. BMW, Audi and Mercedes Benz sold, respectively, 232,600, 309,900 units and 193,000 units, surging 37.6%, 37.4% and 30.6%, respectively.