First pole position finish for the VW Lavida in China.
What a tumultuous year it has been in China. The bottom-line is that for the first time since 1990, Chinese new vehicle wholesales are down at -2.8% to 28.080.600 factory shipments, yet China remains and by very far the largest new vehicle market market in the world (the #2, the USA, is almost 11 million units below at 17.3m). What started as a sudden and surprising plateauing of SUV deliveries last June (-0.5%) which we explained by a government crackdown on P2P digital lending platforms has degenerated into the first full-blown recession of the new car market in China in 28 years, with consumer confidence now at a decades-low, hampered by a crashing Shanghai stock exchange, plateauing salaries and a soft real estate market. While the market was still up 5.6% halfway through the year, the entire 2nd half was in negative, wholesales even accelerating their fall towards the end of 2018, with July (-5.3%), August (-4.6%) relatively contained but September (-11.5%), October (-11.7%), November (-13.9%) and December (-13%) all ghastly. As a result, the YTD tally tilted into negative in November to end the year at -2.8%.
Honda is up 11.6% to post a new annual volume record.
All passenger car segments are in decline in 2018, with sedan and hatchbacks at -2.7% to 11.527.800 units, SUVs down 2.5% to 9.994.700, MPVs down 16.2% to 1.734.600 and microvans down 17.3% to 452.600. Passenger cars as a whole are down 4.1% to 23.709.800 but commercial vehicles (mainly trucks and buses but also pickups) manage another uptick this year at +5.1% to 4.370.800 and cut the overall market loss to -2.8%. In the end, electrified vehicles are the last bastion of growth in China but this may also be hampered in 2019 as subsidies are scheduled to be phased out this year. Sales of new energy vehicles soar 61.7% in 2018 to (comfortably) surpass the million annual units for the first time in history at 1.256.000, including 1.054.000 passenger cars (+82.2%) and 202.000 commercials (+1.7%). This includes 984.000 battery EVs (+50.8%) – 788.000 passenger cars (+68.4%) and 196.000 commercials (+6.3%), 271.000 PHEVs (+117%) – 265.000 passenger cars (+139.6%) and 6.000 commercials (-58%) and 1.526 fuel cell vehicles.
Geely remains the most popular Chinese brand at home.
Chinese-branded passenger cars lose the most volume of all nationalities in China this year, selling 848.000 less than in 2017, a -8% year-on-year drop to 9.979.900 units and 42.1% share vs. 43.9% a year ago. The main benefactors of this sizeable drop are German brands up 4.8% to 5.080.500 units and 21.4% share vs. 19.6% in 2017 and Japanese brands up 5.7% to 4.446.300 and 18.7% share vs. 17% last year. Korean brands also improve at +3.1% to 1.180.500. In contrast, US brands (-18.5%) are slammed down to 2.477.900 units and 10.4% share vs. 12.3% in 2017, potentially bearing the effect of an emerging anti-American sentiment connected to the trade war triggered by the Trump administration. But the worst-off nationality is without a doubt the French, imploding down 32.6% to just 307.000 units and 1.3% share even though a raft of new models have just hit the market. We explore the dumbfounding freefalls of French and American manufacturers further down in this analysis.
Toyota (+13.8%) posts the largest gain in the Top 10.
Production of vehicles in China is down 4.2% to 27.809.000 units, with passenger cars down 5.2% to 23.529.000 and commercial vehicles up 1.7% to 4.280.000. Exports from China total 1.041.000 (+16.8%) with both passenger cars at 758.000 (+18.5%) and commercial vehicles at 283.000 (+12.5%) very dynamic. However quite worryingly, exports dropped year-on-year in October, November and December. A methodology note is that most wholesales figures reported by manufacturers include vehicles that are later exported outside of China, and the wholesales total figure is generally balanced by imports that amount to roughly the same figure as we’ll detail in a separate China Imports update. 2019 forecast by the CAAM is rather optimistic – given the absence of any purchase tax reduction by the government in 2019 (this measure as a way to prop the new car market bak up has been outlawed in December), predicting a stable market at 28.1m new vehicles in 2019 (+0.07%), including 23.7m passenger cars (-0.04%) and 4.4m commercial vehicles (+0.7%). After imports and exports: annual demand is predicted by the CAAM to be 28.2m in 2019. I will venture a more pessimistic forecast of a 2% decline in 2019 to 27.5m units.
Nissan rounds up the brands Top 5.
The big battle among car manufacturers in China is VW vs. GM and once again this year the VW Group is well ahead with deliveries edging up 0.5% to 4.21m units as gains by Audi, Porsche and Skoda more than offset a loss by the VW brand. (Note data in this paragraph only are retail sales including imports and differ from wholesales detailed further down in this analysis). According to the VW Group, Audi is up 11% to 663.000 sales, Porsche up 12% to 80.100 and Skoda up 4.9% to 341.000 but the VW brand is down 2.1% to 3.11m. In contrast General Motors skids down 9.9% to 3.64m sales, with every brand bar Cadillac (+17% to 200.000) recording a steep fall: Buick is down 18% to 1m, Wuling down 14% to 1m, Baojun down 16% to 839.612 and Chevrolet down 4.4% to 523.395. When exports by SAIC-GM-Wuling are included, the volume is now 2.6% to 4.041.668.
The launch of 3 new SUVs including the Tharu (pictured) enables VW to stabilise its sales in 2018.
In the wholesales China-made brands ranking, Volkswagen (-0.3%) is almost immobile and once again manages to sell more than double any other brand in the Chinese market with 3.13m units. The brand is held up by a successful SUV onslaught with the T-Roc (#132), Tharu (#213) and Tayron (#237) all already hovering around 10.000 monthly units and the Teramont (+14.7%) still on the up as well as strong scores from the Phideon (+80.5%), Touran (+24.8%), Passat (+11.7%), Magotan (+5.9%) and Jetta (+3.2%) and holds by the Bora (-1.1%), Lavida (-2.6%), Santana (-3.8%), Sagitar (-5.2%) and Golf (-7.2%). Honda (+2.4%) progresses to a record 1.451.483 units thanks to new generations of the Civic (+25.5%), Accord (+17.6%) and Crider (+14.3%) and strong showings by the Odyssey (+28.8%), Elysion (+22.4%) and Fit (+22.4%). Geely (+11.8%) improves drastically on its record 2017 score to reach 1.38m units, however its incredible stretch of 29 consecutive months of double-digit gains was stopped in August and, in a worrying turnaround, the #1 Chinese brand was haemorrhaging -41% in December. It’s however a new record for the carmaker, making it the only Chinese passenger car brand to sell over 1m units in 2018. The Binyue crossover and Binrui sedans are off to very promising starts, with 10.000 monthly units reached at launch, and the Vision S1 (+530.8%), Vision X3 (+274.4%), Emgrand GL (+19.6%) and GS (+4.8%) all gain ground but the Vision (-0.8%), Emgrand (-4.8%), Boyue (-10.6%) and Vision SUV (-10.8%) have started to fall.
Hyundai (-0.7%) is on the mend partly thanks to the new ix35.
Toyota (+13.8%) closes an outstanding year by posting the largest gain of any Top 10 brand and stepping up to 4th place with 1.295m units, breaking its all-time monthly volume record in November. The (very late) launch of the C-HR/IZOA tandem has added 52.000 sales this year, the Camry (+116.7%) was prodded up by a new generation, with the RAV4 (+12.1%), Levin (+11.5%), Corolla (+11.2%), Highlander (+4.6%) and Yaris L Sedan (+2.3%) also signing strong results. In 5th place overall, Nissan (+5.3%) also manages a positive scorecard, even snapping a new record monthly volume in December. The Sylphy (+18.9%) was the best-selling nameplate in China outright in November, breaking its volume record both in November and December, with the X-Trail (+12.6%) and Qashqai (+12%) also posting excellent results, compensating for the Lannia (-42.4%) and Kicks (-18.8%). The second half of the Top 10 is all in negative, with Hyundai (-0.7%) faring the best thanks to the ix35 (+298%), Elantra Lingdong (+86.2%), Celesta (+81.2%) and ix25 (+46.4%) and despite the Verna (-58.4%), Tucson (-57%) and Mistra (-26.3%). Haval (-9.8%) reduces its annual loss to single digits in the last month of the year as it recovers both in November (+9%) and December (+21%). Changan (-19.7%), Baojun (-13.9%) and Buick (-12.7%) disintegrate.
There’s no contest: Jetour is the most successful brand launch of 2018.
Outside the Top 10, Chevrolet (+11.6%) benefits from a very good welcome for the Equinox (+34.7%) and low-cost Cavalier (+33.1%) breaking into the November and December Top 10 as well as strong scores by the Sail (+24.5%) and Malibu (+4.2%) but the brand was down 17% over Q4. Audi (+12.9%) holds onto the title of #1 premium brand in China ahead of Mercedes (+12.9%) and BMW (+20.8%), while BYD (+23.9%) leaps up 5 spots on the brands ladder to #15, in December returning to monthly volumes not seen since 2010. Qoros (+304.7%), MG (+91.6%), WEY (+61.4%), Cadillac (+31.9%), Roewe (+22.8%), Jaguar (+22.2%) Volvo (+18.1%) and Mitsubishi (+13.5%) post some of the largest gains in the remainder of the ranking while Lynk & Co ends its first full year of sales with an outstanding 120.000 units. No less than 13 new brands have landed in the official wholesales ranking in 2018, and one was reborn (Everus). Make sure you keep in touch with all the latest developing Chinese brands with our Exclusive Guide to all 178 Chinese Brands. Jetour (#54) is by far the most popular new entrant, peaking at over 13.000 sales in December and ending the year above 40.000, all with just one nameplate, the X70. Traum (#63), Bestune (#69) with just under 11.000 sales in two months, Link Tour (#71), Dorcen (#72), NIO (#73), COS (#74) and Yudo (#75) follow. If a long list of domestic brands were hit full frontal by the SUV drought, among them Landwind (-55.8%), Haima (-50.4%), Karry (46.8%), Lifan (-46.8%), Bisu (-44%), Cowin (-44%), Soueast (-43.6%), FAW (-35.7%) and Leopaard (-32%), and as Suzuki (-66.2%) is logically headed towards oblivion as it pulls out of China, one of the big 2018 stories is the implosion of very prominent foreigners…
Smashing success in Europe, but not even a look in China. Why?
Ford (-54.3% but -80% in Dec), Peugeot (-44.1% but -75% in Dec), Jeep (-38.6% but -52% in Nov), Renault (-30.6% but -82% in Nov) and Citroen (-14.1% but -66% both in Nov and Dec) have all but disappeared in China in 2018. As far as Ford and Jeep, as we explained earlier this could be due to the trade war with the US instilling an anti-US sentiment, and in Ford and Renault’s cases, the absence of new models can also explain the fall in a market that spits out a dozen new China-made nameplates each month. But for Peugeot and Citroen, present in China for decades and to which we can add DS (-33.5% but -76% in Oct and Nov), the steep fall is a little more ambiguous. Granted, they have suffered from a reputation of unreliability since the days of the ZX taxis, but the slew of quality new launches (4008, 5008, C4 and C5 Aircross) aimed squarely at the most dynamic end of the market, should have stabilised sales but clearly hasn’t. The issue is that these two brands – and it can also be applied to Ford to a certain degree – have fallen out of Chinese buyers’ top-of-mind at a time when locals such as Geely, Haval, Roewe, MG, Lynk & Co, WEY, Chery and Jetour have been very loud on every TV and digital screen imaginable. This way, potential buyers don’t even test drive Citroen, Peugeot or Ford models anymore, however good they may be, let alone visit a dealership. These brands are simply not on the radar anymore, which explains the dizzying fall – it’s not that their cars aren’t good at all, it’s a matter of perception, and sadly perception is reality when it comes to hard sales. Peugeot CEO Tavares is well aware of the issue and has admitted that PSA Peugeot-Citroen isn’t good at “storytelling” in China. In other words, the brands aren’t making young Chinese dream anymore. The road to recovery – if it even exists now that a newcomer like Bestune can reach Peugeot and Citroen levels for its 2nd month of sales and outsell Renault 4 to 1 – will be long and hard indeed and I don’t anticipate these brands to bottom out in 2019 as no significant new launches are planned.
The Haval H6 is the #1 SUV in China for the 6th year in a row.
Model-wise, even though it loses some ground on 2018, the VW Lavida (-2.6%) finally snaps its first ever annual win after ranking #2 no less than 6 times: in 2010, 2011, 2013, 2014, 2015 and 2017. The Lavida ranked #1 in the monthly charts without interruption between April and October and puts an end to 5 consecutive years of reign by the Wuling Hongguang (-10.5%) down to #3 and posting 3 monthly wins this year including, encouragingly, December. The Lavida also marks the first outright win by a sedan since the Ford Focus in 2012 and the lowest winning volume (503.825) since 2012 also, illustrating an increased fragmentation of the Chinese market. The Nissan Sylphy (+18.9%) leaps up 3 spots to a record 2nd place overall, nabbing its first-ever monthly win in November, while the Haval H6 (-10.6%) remains the #1 SUV in China (we drove it) for the 6th year in a row – no interruption since 2013 – with a 90.000-unit advantage over the Baojun 510 (+0.7%, test drive is here) whose calm year-on-year evolution hides 4 months of explosive growth at the start of 2018 but the last 7 months of the year hovering between -31% and -49%… The Toyota Corolla (+11.2%) is up 4 spots to #5, a very respectable performance given the new generation is due mid-2019. Strikingly, VW monopolises the rest of the Top 10 with the Jetta (+3.2%), Sagitar (-5.2%), Tiguan (-10.8%) and Santana (-3.8%).
Fastest off the 2018 starting blocks: the Baojun 530.
The only two 2018 launches making it into the Top 100 are the Baojun 530 (#60, we drove it) peaking at 17.003 units in May, followed by the Baojun 360 (#68) peaking at 18.943 in September even though these two nameplates haven’t managed to compensate the falls of the Baojun 730 (-59.5%) and 310 (-31%) and the discontinuation of the 560. Then we have the Roewe i5 (#115) peaking at 20.471 sales in December (the largest monthly volume by a 2018 launch), the Chery Tiggo 8 (#129), VW T-Roc (#132), Haval H4 (#148), Jetour X70 (#157), BMW X3 (#166) and Skoda Kamiq (#168). Over in the New Energy aisle, the BAIC EC-Series (+16.1%) holds onto the #1 spot for the 2nd year running with over 90.000 wholesales, followed this year by the JAC iEV6E (+80.3%) at 51.000, the Chery eQ (+82.2%), BYD Qin (+83.2%), BYD Song EV (new), JMC E200 (+145.5%), BAIC EU-Series (+183.8%), BYD Yuan EV and BYD Tang EV (both new).
Previous year: China 2017: Geely becomes #1 Chinese brand in market up 3.2%
Full Year 2018 Top 96 All China-made brands and Top 617 China-made models vs. Full Year 2017 figures below.