* See the Top 90 All China-made brands and Top 465 models by clicking on the title *
The depression Chinese new vehicle sales have fallen into in the past few months isn’t going away: wholesale deliveries endure a 4th straight year-on-year drop and 2nd consecutive double-digit decline in October at -11.7% to 2.380.100 units, echoing retail sales down 16% in September and the steepest year-on-year fall since 2012. This follows drops in July (-5.3%), August (-3.8%) and September (-11.5%) as well as an ominous -11.6% last February. As a result, the year-to-date volume is now down 0.1% to 22.870.900 wholesales, the first YTD decline at this stage of the year since 1990. The big question mark over the past few weeks was whether the Chinese government would lower the purchase tax for vehicles of 1.6L or under from 10% to 5% to spur back dynamism. This measure was taken both times the market dropped for three consecutive months – in 2009 and 2015 – with great results (annual market back in positive each time). However this will not happen, at least in 2018 as we enter unchartered territory for new vehicle sales in China. On November 15, the Chinese government said it would not reduce taxes on vehicle purchases, demonstrating a willingness to let the market adjust naturally – something it has never done before, even stating the slowdown could help weed out weaker players. In other words, buckle up for a wild ride over the next year…
This means annual China sales will decline in 2018 for the first time since 1990: Nomura Securities expect Q4 sales to drop 7.5% leading to an annual result for 2018 at -1.6% to 28.4 million wholesales, I predict a much steeper drop, around -12%, as the last two months of the year will suffer from record-high comparison levels in 2017. What started as a sudden, surprising and historical plateauing of SUV sales last June (-0.5%) has now spiralled into a full-blown market decline, amplified by a precarious stock market situation with the Shanghai composite index falling to a four-year low and down 23% since the start of the year. Looking at the detail by segment for October, all corners of the market are hurt: sedans are down 10.1% to 995.800, SUVs down 14.7% to 870.900, MPVs down 22.4% to 147.200 and microvans down 5.3% to 32.900 resulting in passenger cars down 13% to 2.046.800. Commercial vehicles are down 2.8% to 333.300 units. Year-to-date, sedans are now down 0.04% to 9.422.000, SUVs remain up 1.6% to 8.106.000, MPVs drop 14.1% to 1.408.600 and microvans are down 19.1% to 367.400 resulting in passenger cars down 1.02% to 19.304.000. Commercial vehicles are up 5.5% to 3.567.000 to reduce the overall market decline to -0.1% at 22.870.900.
As we have observed over the past few months, hampered by slower SUV sales due to a government crackdown on P2P digital lending platforms, Chinese passenger car brands tumble down 18% in October to 851.600 wholesales or 41.6% market share vs. 44.2% a year ago and now down 3.6% year-to-date to 8.091.100 and 41.9% share vs. 43% over the same period in 2017. Foreign brands drop a more measured 8.9% this month to 1.195.100 units or 58.4% share vs. 55.8% a year ago, with Japanese brands in particularly good shape at +9.4% to 403.500 and 19.7% share vs. 15.7% in October 2017. The only beacon of light comes from New Energy Vehicles up 51% to 138.000 including 111.000 EVs (+44.7%) and 27.000 PHEVs (+84.6%), led this month by the BAIC EC-Series (20.648 sales). Year-to-date, NEVs are up a whopping 76% to 860.000 wholesales, well on track to surpass the million annual units for he first time in history. As a result of these poor market conditions, the average new-vehicle inventory at Chinese dealerships continues to increase at 56 days in October vs. 55 in September, with Chinese brands carrying a backlog of 70 days up from 68, foreign mass-market locally-produced brands at 54 days up from 53 and luxury and imported vehicle dealers at 47 days, up from 43 in September.
In the China-made brands ranking, Volkswagen (-14%) remains comfortable leader at 266.000 units but endures a second consecutive double-digit fall. Very strong scores by the recently renewed Lavida (+57%) and its new crossover lineup formed by the T-Roc (7.732), Tharu (4.096) and Tayron (3.671) fail to compensate for the freefalling of blockbusters such as the Bora (-44%), Lamando (-36%), Passat (-31%), Tiguan (-31%), Polo (-26%), Jetta (-23%), Santana (-20%) and Sagitar (-16%). Honda (+18%) and Toyota (+25%) on the other hand swim vigorously upstream, the former thanks to excellent performances by the XR-V (+145%), Jade (+100%), Fit (+48%), Odyssey (+30%), Elysion (+26%), Crider (+23%) and Accord (+22%) and the latter due to very solid showings for the Camry (+618%), Highlander (+37%), Levin (+16%), Corolla (+7%), IZOA (6.801) and C-HR (4.845). It had to happen at one point: after ending 29 consecutive months of double-digit gains in September, local hero Geely (-9%) posts its first year-on-year decline since December 2015, as the gearing up of the new Binrui (7.580) and Emgrand GE (3.552) and good health of the Vision X3 (+51%) aren’t enough to reverse steep falls by the Boyue (-33%), Emgrand (-25%) and Emgrand GS (-25%).
Nissan (+2%) also manages to edge up in 5th place thanks to the Qashqai (+19%), Sylphy (+13%) and X-Trail (+5%) and despite ghastly results by the Kicks (-65%), Lannia (-56%) and Teana (-15%). The great surprise of the Top 10 is Haval (+4%): whereas it was hit full frontal by the SUV slump of recent months, it now puts an end to an abysmal streak of 14 double-digit declines in the past 15 months, posting its first gain since March 2017 thanks to the arrival of the F5 (6.265 sales) and a record volume by the M6 (12.275) just as its blockbuster the H6 (-16%) returns to ultra-domination of the SUV segment, above 40.000 monthly units for the first time since last January. In the remainder of the Top 10, Chevrolet (-11%) with the Orlando gearing up at 4.669, Buick (-13%) and Hyundai (-13%) roughly march the market decline but Changan (-27%) freefalls. Further down, great performers include Qoros (+427%), Changhe (+84%), MG (+54%) thanks partly to the new HS (4.289), BMW (+47%) with the new X3 still up (5.951 units), BYD (34%), Cadillac (+22%) with the XT5 at a record 10.460 sales, SWM (+17%), Volvo (+11%) pushed by the S90 up 98% to a record 5.448, Audi (+9%), Roewe (+7%) and Wuling (+6%) back to growth thanks to the new generation Hongguang S.
If WEY (-33%) continues to align double-digit year-on-year drops with the VV6 now above 4.000 units but the VV7 at -69% and the VV5 at -50%, archenemy Lynk & Co brilliantly posts an 8th consecutive volume record at 15.208, with a new all-time high by the 02 (5.766) and the arrival of the 03 sedan. Launched last month, Jetour is up 17% with 9.077 sales of its sole nameplate the X70: that’s almost as much as established brands such as Peugeot, Volvo and Jeep! In fact, for its second month in market the Jetour X70 is now the best-selling model in the entire Chery Group above the Chery Tiggo 8 at 7.300, also a record. We welcome no less than three new brands in October: Dorcen (#61), Nio (#62) and Lark (#77) which will all be covered in our upcoming October 2018 Focus on All-new models, lifting to 13 the number of brands having appeared in the ranking over the past 12 months (all Chinese).
Struggling foreign marques include DS (-76%), Land Rover (-73%), Ford (-67%), Suzuki (-66%), Peugeot (-64%), Renault (-61%), Jaguar (-47%), Citroen (-43%) and Jeep (-40%) while among Chinese carmakers Landwind (-88%), Bisu (-80%), Haima (-70%), Soueast (-64%), FAW (-60%), Zotye (-59%), Brilliance (-58%), Dongfeng (-55%), Lifan (-54%), Baojun (-46%) with the 8-month old 530 now down 83% on its volume record at 2.973 vs. 17.003, Leopaard (-45%) and JAC (-43%) are hit the hardest. Most Chinese brands in this list pay their over-reliance on SUVs: Dongfeng only have 3 sedans above 100 sales this month, FAW only has one above 200 and Brilliance’s only sedan is the H530 (276 units).
Full October 2018 Top 90 All China-made brands and Top 465 models below.