China Autos Report Q2 2012 Published: March 2012
No. of Pages: 58
Price: US$530
As expected, growth in China's total vehicle sales was much lower in 2011 than the 32% year-on-year (y-o-y) recorded in 2010. Sales rose just 2.6% to 18.5mn units, slightly surpassing BMI's expectations. Although we believe growth will be stronger in 2012, it will still be restricted to single digits, largely owing to ongoing measures to curb congestion and pollution, while the possibility of a hard landing for the economy will provide a major downside risk to our projections. While we believe 2012 has the potential to be a better year, there are still considerable risks to our forecast for 6.9% growth in total vehicle sales. A recovery in the commercial vehicle segment to achieve growth of 3.0% will be key to the overall uptick, which would largely be a response to the low base effect of 2011. With business sentiment central to this view, our bearish economic view is perhaps the biggest downside risk. On the upside, however, deputy secretary general at the bus division of the China Highway and Transportation Society, Yu Zhenqing, said in December 2011 that the recent growth in bus sales is expected to continue at a stable rate. Looking at trade, the Chinese Ministry of Commerce has announced it will impose anti-dumping tariffs on certain imported US vehicles, effective from December 15 and lasting two years. This is the latest move in a saga of trade disputes between China and the US, many of which have centred on the autos sector. However, as with many previous issues, BMI believes the move is largely a gesture and will not seriously affect US imports, given the relatively low volumes involved. Duties will be imposed on vehicles with an engine capacity of 2.5 litres or above, signalling the government's intent to protect its own domestic industry as it tries to move into the premium market. Although Andrea Mead of the US Trade Representative says the tariffs 'violate multiple WTO rules', the actual impact on carmakers is likely to be limited by their increased production operations in China. Indeed, General Motors Company (GM) has announced expansion plans for its Cadillac brand in China, where it expects the premium segment to continue outperforming the overall passenger car market. According to GM China president Kevin Wale, the company will add more Cadillac models in order to compete in a market currently dominated by the world's top three high-end marques Audi, BMW and Mercedes-Benz. As new models join the Cadillac line-up, GM will increase its domestic production of the range. Wale said the carmaker could increase its annual production capacity by up to 40% over the next two years. China Auto Market Table of Content Executive Summary . 5 SWOT Analysis 6 China Autos Industry SWOT .. 6 China Political SWOTs .. 7 China Economic SWOTs 8 China Business Environment SWOTs 9 Global Overview . 10 Eurozone And EMs Pose Risks To 2012 Growth Outlook; US And Japan On The Rise ... 10 Passenger Car Sales (Units), Jan-December 2011 ... 10 Replacement Growth? . 10