Chinese vehicle sales have risen in 2015, responding to the government stimulus measure for vehicles with 1.6-litre engines and lower.
IHS Automotive perspective
Sales in 2015 rose on the back of growth of the passenger vehicle market, which witnessed a surge in sales in the final quarter as the market responded to the 50% cut in the new-car purchase tax for vehicles fitted with engines of 1.6 litres and smaller.
Chinese brands now account for 53.7% of SUV sales of locally produced models in China, in line with IHS Automotive forecasts.
Overall sales of new energy vehicles in 2015 have risen by over three times the volume of 2014, although this volume is still low when compared with total vehicle sales in China, and in 2015 accounted for just 1.3% of the Chinese vehicle market, but the government anticipates this percentage to rise in 2016.
Total vehicle production and sales in China have risen by single-digit rates in 2015. Summary data from the China Association of Automobile Manufacturers (CAAM) shows that a total of 24,513,300 vehicles were produced in China in 2015, marking a 3.3% year-on-year (y/y) increase. Meanwhile, sales of locally produced vehicles hit 24,597,600 units in 2015, up 4.7% y/y. (Growth rates dropped by 4 percentage points with regard to production and 2.2 points with regard to sales.)
The passenger vehicle (PV) market witnessed production and sales of over 20 million units in China in 2015. Total PV production levels hit 21,079,400 units, the CAAM states, marking an annual increase of 5.8% y/y. Sales of PVs in China rose by 7.3% y/y in 2015 to 21,146,300 units. The CAAM defines PVs to include sedans, sport utility vehicles (SUVs), multi-purpose vehicles (MPVs), minivans, and minibuses.
The SUV segment continues to bring in strong double-digit growth rates and in 2015 SUV production grew 49.7% y/y, while sales rose 52.4% y/y. MPV sales grew 10.1% y/y, while production levels also rose by around 7.7% in 2015 in China. However, sedan sales fell in 2015. Overall production levels of sedans in China fell 6.8% y/y, while sales fell 5.3% y/y, the CAAM has stated in the summary data document, without providing the total volume of the segment. Meanwhile, crossover utility vehicles, which include minivans and minibuses, witnessed a production decline of 16.9% y/y and sales dropped 17.5% y/y.
Commercial vehicles (CV) sales and production, however, continue to decline in China. A total of 3,423,900 CVs were produced in the country, while 3,451,300 CVs were sold in China in 2015, marking annual declines of 10% and 9% respectively.
Outlook and implications
The Chinese passenger vehicle market responded to the government stimulus measure introduced on 1 October 2015. This was a 'quick fix’ remedy which had already been tried and tested in the Chinese vehicle market in previous years, and in 2015, following a disastrous summer when the market began faltering, the government rushed in to offer a 50% cut in the new vehicle purchase tax for cars with engines of 1.6 litres and smaller. This brought down the new-car purchase tax from 10% to 5% and prompted increased sales for vehicles with engines of 1.6 litres and smaller, resulting in the market rebounding in October and continuing the positive growth to the end of the year. The 'quick fix’ policy is expected to run until the end of 2016.
The CAAM also confirms that the sudden surge in vehicle sales in the final quarter was a result of the 'quick fix’ policy. Vehicles with engines of 1.6 litres and smaller amounted to 14,508,600 units in 2015, marking an annual increase of 10.38% y/y.
Meanwhile, overall sales of Chinese brand passenger vehicles also rose in 2015, the CAAM states. This is in line with IHS Automotive forecasts which show that local OEMs will see an increase in market share as their products are gaining greater consumer loyalty among Chinese consumers as the standard of the cars rises, while the government is also strengthening its consumption of local-brand vehicles, thereby raising the profile of Chinese brands in the country.
In 2015, Chinese brand PVs hit sales of 8,737,600 units, marking 41.13% of total PV sales as defined by the CAAM. Of these, Chinese brand sedan sales hit 2,430,300 units, or 20.7 % of total sedan sales. Within the SUV segment, Chinese brand SUV sales reached 3,343,000 units, accounting for 53.7% of locally produced SUVs sold in China. In the MPV segment, local brand sales accounted for 88.6% of the segment or 1,865,800 units.
The Chinese brands are witnessing growth within the domestic market. Exports from China continue to plummet on the back of stringent new policies in a number of countries that have introduced high import tax barriers and local-content rate demands, thereby reducing the price advantage of Chinese-built vehicle imports. A total of 728,200 vehicles were exported from China in 2015, marking an annual decline of 20% y/y. Of this, PV exports hit 427,700 units, down 19.8% y/y, and CV exports were down 20.4% y/y to 300,500 units.
However, with the Chinese government’s new emphasis on strengthening its purchase of local brand vehicles, and its campaign against corruption and conspicuous consumption, the total number of vehicles imported into China in the first 11 months of 2015 hit 991,200 units, down 23.5% y/y.
Meanwhile, new energy vehicle (NEV) sales and production levels continue to rise as the government in China further emphasises its commitment to clean-emission vehicles. A total of 340,471 NEVs were produced in 2015 in China, while sales hit 331,092 units; this amounted to over 3 times the volume sold and produced in 2014. Of this, pure electric vehicles' (EVs) production hit 254,633 units, while sales of these battery EVs hit 247,482 units in 2015. Plug-in hybrid electric vehicle (PHEV) production hit 85,838 units, while PHEV sales were 83,610 units.
Passenger EV production was 152,172 units in 2015, while sales reached 146,719 units. Passenger PHEV production levels hit 62,608 units, while sales were 60,663 units. Meanwhile, production and sales of commercial vehicle EVs hit 102,461 units and 100,763 units respectively, up over 10 times the volume in the preceding year. Commercial PHEV production and sales hit 23,230 and 22,947 units respectively, up 91.1% and 88.8% y/y respectively.
The Chinese government anticipates that sales and production of NEVs in China will double in 2016 to over 700,000 units.
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