China January 2017: Audi tumbles down 35% in market down 1.1%

The Jeep Compass sees a 613% increase on its inaugural month last December to #200.

* See the Top 70 All-brands and Top 365 All-models produced locally by clicking on the title *

With a month delay we are able to cover the Chinese car market for January on BSCB. February will follow very shortly. Note only passenger cars and light commercial vehicles produced in China are accounted in this data set, no imports and no medium-heavy commercials. Light vehicle sales in China are down 1.1% year-on-year to 2.219.564 vehicles according to the China Association of Automobile Manufacturers. The China Passenger Car Association on the other hand reports a 9.8% decline to 2.12 million units. In any case, this is the first year-on-year drop in China in a year, and the direct effect of the tax hike on vehicles with 1.6L engines and below from 5% over the course of 2016 to 7.5% from January onwards. It is still a very modest decline taking into account forward sales in December to still benefit from the lower tax. Also coming into the picture is the Lunar New Year celebrated in January vs. February last year and resulting is fewer selling days. All-in-all, adjusted annually, January Chinese car sales should actually be up.

The All-new Tiguan L should boost VW sales in China this year. 

In January, the SUV segment is the only one in positive albeit at a slower rate: +9.7% year-on-year from 805.673 in January 2016 to 883.804 now. This is well below the million units hit both last November and December but the SUV market share of passenger cars continues to climb: from 35.9% a year ago to 39.8% this month. Reversely, “traditional” passenger cars are down 3% to 1.079.146 and see their market share drop from 49.6% in January 2016 to 48.6% now. MPVs seem to have hit a wall: down an abysmal 19.2% year-on-year to just 205.634 units just as the Wuling Hongguang takes 2nd spot in the models ranking just below the VW Lavida (see further down). Finally microvans continue their race to oblivion with a further 28% decline to 51.000 vehicles sold.

Something we predicted in our 2015 analysis of the Chinese market: the rise and rise of used-car sales. According to the China Automobile Dealers Association, these are predicted to surge 20% to 12.5 million units in 2017, after gaining 10% to 10.4 million in 2016, as provinces ease restrictions on sales of used vehicles from other regions. The ratio is still in favour of new car sales by a large margin though. Another interesting evolution is the 74% plunge of electric and plug-in hybrid sales to just 5.682 units as the government penalises companies that cheated to inflate their EV subsidies. In the detail, battery-electric sales are down 68% to 4.978 units and plug-in hybrids are down 90% to 704…

As this is a delayed analysis of the Chinese market we will concentrate on highlights today so the February update can come as soon as possible with more detail.

Audi sales in China skid down 35% in January.

1. Audi frankly outsold by both Mercedes and BMW

In 1995, the Volkswagen Group started producing Audi models in China through a joint-venture with FAW Group, and thus virtually created the luxury segment in China. It has led the luxury charts ever since its introduction in market – a fantastic 22 years in a row. Yet in January Audi misses out on the luxury top spot for the second month running and could be facing a very difficult year indeed. Down a devastating 35% year-on-year to 35.181 units, not only did the marque not rank #1, it was also frankly outsold by both Mercedes-Benz up 39% to 58.799 and BMW up 18% to 51.345. Meanwhile Cadillac is up 116% to 18.011 and Volvo up 16% to 8.362. According to Automotive News China, Audi’s paltry performance is the result of two main events. First: in 2016 the brand dumped excessive vehicle inventories on its dealerships, and most of them lost money. Second: Audi signed a tentative agreement with SAIC in November to establish a second dealership network. Audi dealers – who operate under the original FAW joint-venture, have been aggressively fighting these two events, and the situation is now at a standstill, with dealers demanding 28 billion yuan (US$4 billion) to cover losses that they blame on the company adding too many distributors, and Audi refusing to shelve its plans of a second joint-venture and distribution network. At the start of the year, Audi dealers threatened to stop ordering cars and it turns out a significant part of them were not bluffing, hence the gigantic drop we are witnessing.

Renault is the most popular newcomer among local producers.

2. Global carmakers suffer, selected Chinese manufacturers post healthy gains

Audi stirs the entire Volkswagen Group down 14% this month to 344.000 sales with Skoda down 4.3% to 30.000 and Volkswagen official retail data n/a. Yet General Motors fares worse at -24% to 321.264 units, Ford is down 32% to 88.432 and both Toyota and Nissan also plunge. Hyundai is the exception: up 6.4% to 80.017 deliveries. Among the numerous Chinese carmakers selling at home, a few post spectacular results in an adverse environment: Geely and SAIC and both up 71%. GAC is up 29%, Changan up 7.7% and Great Wall Motors up 0.7%. Looking into the detail of wholesales figures (data table below the jump), Volkswagen (+7%) distances Changan (+7%), Buick (-5%), Geely (+70%) and Honda (+18%). Ford (-28%) and Dongfeng (-16%) struggle but in this ranking Audi (-8%) is still ahead of Mercedes (+44%) and BMW (+14%). The most popular new brand – launched in the past 12 months – among local producers is Renault (#39) ahead of SWM (#45), Cowin (#47), Hanteng (#49), Borgward (#53), Land Rover (#55), Bisu (#59) and Jaguar (#63)

Geely sales are up 71% year-on-year in January. 

4. Best-selling models

In January the VW Lavida edges past the Wuling Hongguang to claim the title of best-selling vehicle in China with 60.233 sales (+8%) vs. 60.132 (-14%) for China’s favourite MPV. The Haval H6 is knocked down one spot to #3 but still gains 9% year-on-year to 45.993 units. The VW Jetta is back up 38 spots on December to #4, the GAC Trumpchi GS4 is up 21 to a record 5th place (also hit last July), the Buick Excelle GT is down 1% but up 4 spots on last month to #6 and the Nissan Sylphy is up 99% on a particularly weak January 2016 score to #7.

Thanks to the arrival off the new generation and a 7-seat variant dubbed Tiguan L, the VW Tiguan cracks the Chinese Top 10 for the first time since September 2015 and hits its highest monthly volume since January 2015 at 31.092 units. In the SUV charts, the Tiguan ranks 3rd below the Haval H6 and GAC Trumpchi GS4 but distances the Buick Envision (+18%), Baojun 560 (-32%), Haval H2 (+44%), Geely Boyue and Roewe RX5, all aforementioned nameplates selling upwards of 20.000 units this month.

GAC Trumpchi GS8 sales hit a record 9.418 units in January.

Further down the ranking, a handful of high profile nameplates manage to break their volume record despite a slower market compared to December. Among them, notice the Baojun 310 at 18.006 (#27), the Geely Emgrand GS at 10.333 (#68), Geely Emgrand GL at 10.208 (#70), GAC Trumpchi GS8 at 9.418 (#78) and the Renault Koleos at 4.814 (#135). Finally, let’s note that there are 12 Chinese nameplates among the 15 most popular new comers (<12 months). Led by the Geely Boyue (#20), Roewe RX5 (#21), Baojun 310 (#27), Dongfeng Fengguang 580 (#30), Chery Arrizo 5 (#35) and Changan CX70 (#38). The Chevrolet Cavalier (#43), Hyundai New Verna (#58) and Mazda CX-4 (#98) are the only new foreigners to crack the January Top 100.

Bisu T3 sales are up 349% on last month to #215 

5. Results of December launches

Among the 13 locally-produced new nameplates that hit the Chinese market in December, the Jeep Compass fares the best with a 613% increase on a modest 300 sales for its inaugural month up to #200 with 2.138 sales. Also displaying explosive growth is the Bisu T3 up 349% on its December score to #215 and 1.436 deliveries. The Venucia T90 follows with a very impressive 71% gain to 4.252 sales at #147 and the Dongfeng Fengshen AX5 edges up 7% to #188. Leader of all newcomers last month, the Soueast DX3 seems to have already eaten up its potential with deliveries down 26% to a still very respectable #114.

Venucia T90 sales are up 71% on December. 

6. All-new launches for January are covered in a separate post as always

Note: Main article brands data is retail sales unless indicated otherwise, data tables below are wholesales. Overall market = Light vehicles + Commercial trucks and buses. Light vehicles = passenger cars + microvans. Passenger cars = sedans+SUV+MPV.

Previous post: China Full Year 2016: Tax cut boosts market up 14% to 28 million sales

Previous post (LCV): China LCV Full Year 2016: Wuling Mini Truck leads, pickups up 11%

Previous month: China December 2016: Haval up 73%, Geely up 101% in final tax rush

One year ago: China January 2016: Baojun 560 threatens Haval H6 for SUV title

Full January 2017 Top 365 All-models produced locally below.