CAAM wholesale data show total Chinese vehicle sales increased 3.9%, passenger vehicle sales up 9% in Q1

Data from the China Association of Automobile Manufacturers (CAAM) show that the Chinese market for locally produced vehicles continues to see growth. However, the growth rates are in the single digits, with the overall market's rate of growth at 3.9% in the first quarter, propelled by the demand for passenger vehicles, which rose by 9% in the quarter. It should be noted that CAAM data refer only to wholesale vehicle production and sales. This means that sales reported by the CAAM are vehicles that have been moved from the automakers' production bases to dealerships. CAAM data also only include models that have been locally produced and sold in China; the data do not include imports.

In total, 2,283,600 vehicles were produced in China in March, an increase of 5.5% year on year (y/y), while a total of 2,240,600 vehicles were sold in the month, up 5.9% y/y. In the first quarter, a total of 6,201,600 vehicles were produced in China, an increase of 5.3% y/y. In the first-quarter period, a total of 6,153,000 vehicles were sold in China, an increase of 3.9% y/y.

The passenger vehicle (PV) segment is defined by the CAAM to include sedans, sport utility vehicles (SUVs), multi-purpose vehicles (MPVs), and minibuses. The PV segment's production levels in China in March hit 1,928,500 units, an increase of 10.3% y/y, while sales in the month hit 1,870,400 units, marking 9.4% y/y growth. In the first three months of the year, production levels in the PV segment hit 5,310,010 units, up 10.7% y/y, while sales were 5,305,100 units, marking a 9% y/y growth rate. Production of SUVs was up 48.6% y/y in the quarter, while sales of SUVs were up 48.8% y/y.

Commercial vehicle (CV) production was 355,000 units in March, down 21.7% y/y, while sales of CVs dropped 19.4% y/y to 370,200 units. In the first quarter, a total of 891,500 CVs were produced in China, down 18.4% y/y, while a total of 847,900 CVs were sold in China, down 19.5% y/y.

Meanwhile, a total of 60,800 vehicles were exported in March from China, marking a decline of 18.4% y/y. In the first three months of the year, exports dropped 12.3% y/y to 183,200 units.

Outlook and implications

The Chinese vehicle market continues to bring in growth on the back of demand for passenger vehicles, but the growth in the mainstay sedan segment is slowing. Volume production and sales of sedans in China still account for majority of the PVs produced and sold in the country, but the level of growth is dipping in comparison with the same periods last year. This is a worrying sign for automakers that are not content with the volume sold previously but which want growth rates in double digits.

The sedan segment of locally produced models saw a total of 1,072,800 units sold in March, marking a decline of 1.43% y/y. Meanwhile, a total 474,100 SUVs were sold in the month, up 53.57% y/y; however, minibuses continued to see declines.

The SUV segment continues to bring in growth rates, while the overall largest volume segment continues to be the sedan segment, though this is witnessing a declining growth rate. With the SUV segment's double-digit growth, automakers are rapidly trying to expand their presence in the segment by offering more products for Chinese consumers.

This year's Shanghai Motor Show (22-29 April) will be the launch pad for a number of SUVs in China, as well as a number of concept SUVs which automakers say have been developed for the local market. These will be on display for Chinese consumers to comment on and then likely will be pushed as production variants in a year's time, says IHS Automotive's light-vehicle production analyst Julia Ma.

North American automaker Ford has announced that it will bring in SUVs under the premium Lincoln brand, with two in the line-up - the MKC, a small SUV, and the MKX, a mid-sized SUV - while under the Ford brand, the new Edge, which just began production in March in China, will be shown. The car has been adopted for Chinese consumers by adding an extra third row making it a seven seater (see China: 24 March 2015: Ford expands production capacity in China, begins Edge production at new Hangzhou plant). Ford is also likely to show the Everest SUV, which it will be built with commercial vehicle partner Jiangling Motors Corp (JMC).

General Motors (GM) will also show SUVs and has this week launched sales of the Buick Envision 20T SUV, priced at CNY219,900-259,900. This follows the Buick Envision 28T, which was launched in October 2014 and has sold 40,000 units since the launch, the automaker states.

Japanese automakers are also ramping up SUVs on offer in China. Honda has announced that it will show a new concept SUV designed specifically for Chinese consumers. The automaker will also release the updated Honda CR-V SUV.

Nissan has also announced the launch of the Dongfeng Fengdu MX6 SUV, which is built under the Zhengzhou Nissan venture. The car was launched in Beijing and is priced at CNY122,800-169,800. Meanwhile, Nissan also launched sales in March of the locally produced Infiniti QX50 SUV, which is priced at CNY349,800-449,800.

Other international automakers such as Citroën have also announced they will join the SUV trend in China. Citroen will reveal the new Aircross concept SUV (see China: 9 April 2015: Shanghai Motor Show 2015: Citroën to reveal Aircross concept), while Mercedes will launch the new GLA SUV, which has just started production in China (see China: 8 April 2015: Daimler opens new 250,000-upa compact car plant in China).

Meanwhile, Great Wall plans to launch the Havel H8 SUV on to the market this month (see China: 23 March 2015: Great Wall to launch new Haval 8 in April) and local automaker Lifan will debut the X80 SUV at the show, as domestic brands are already witnessing growth on the back of SUV sales in China (see China: 31 March 2015: Chinese domestic brands' sales rise on new SUV models). Local media also report that Qoros Automobile will release the Qoros 2 SUV concept at the show, which is also known as the Qoros XQ3 SUV, scheduled for launch later this year.

IHS Automotive continues to forecast overall growth for the SUV segment in China, although growth rates are slowing. In 2014, China's SUV production rose 36.72% y/y to 4.32 million units. This year, we forecast China's SUV production levels to rise by around 22.5% y/y; however, SUV production growth will then begin to slow. Double-digit growth in SUV production is forecast to continue to 2017, when SUV production levels in China are expected to hit over 6.6 million units per annum (upa). From 2018, production growth rates are predicted to slow to single digits, although output will reach more than 7.04 million upa (see China: 27 March 2015: China's thirst for SUVs expected to slow down once production hits 7 mil. upa).