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China Auto Sales Jump 46%

|Includes:F, GM, NSANY, Volkswagen AG ADR (VLKAY)

China Automobile Traffic

China Auto Sales Jump 46% - By Zacks Investment Research

Februarcy 22, 2013 Zacks reported that according to the China Association of Automobile Manufacturers (CAAM), vehicle sales in China jumped 46.4% to 2.03 million units in Jan 2013, mainly due to the low base in the same month last year. The increase in sales was much higher than last year. In 2012, sales grew 4.3% to 19.3 million vehicles.

Medium-sized cars and sports utility vehicles (SUVs) were the most popular class of vehicles during the month, constituting 57.7% and 15.5% of the market, respectively in the month. Small cars accounted for 20% of the market while luxury lineups occupied a tad 3%.

Sales and Market Share by Automakers

Volkswagen AG (OTCPK:VLKAY) continued to be the leading automaker in the world's largest market with 21.8% market share. Sales of its Audi brand surged 38.5% to 37,678 units. The second leading automaker was General Motors Company (NYSE:GM), which occupied 12.2% of the market. It saw a 26.0% rise in sales to 310,765 units during the month.

GM operates three joint ventures in China. The first one is a 49%-51% car manufacturing venture with Chinese automaker SAIC Motor Corp in Shanghai. The second is a mini-vans and pick-up trucks three-way joint venture with SAIC and Liuzhou Wuling Automobile in southern China. The third one is a light commercial vehicles joint venture with FAW Group.

Nissan Motor Co. (OTCPK:NSANY) was the third leading automaker in the country with more than 5% market share. Nissan's sales escalated 22.2% to 115,700 vehicles in Jan. Ford Motor Co. (NYSE:F) saw the strongest sales increase among the foreign automakers in China. Its sales leapt 98.0% to 61,475 vehicles during the month.

Ford manufactures Fiesta, Focus, Mondeo and other sedans in China in a three-way joint venture with Chongqing Changan Automobile Co. Ltd and Japan's Mazda Motor Corp. The company also has a 30% ownership in Jiangling Motors Corp Ltd that produces Transit vans.

The domestic automakers in China accounted for 32% of the market. Some of the leading companies among them are Geely, BYD, Great Wall and Chery. Meanwhile, European brands constituted 25.8% of the market, Japanese brands 16.7%, American brands 14.3% and Korean brands 11.0%.

2013 Outlook

According to CAAM, auto sales in China are expected to rise 7% to more than 20 million vehicles in 2013, led by strong demand for passenger vehicles and economic recovery. The association believes SUVs will remain the fastest- growing segment in the year while commercial vehicles will record a moderate gain in sales.

However, the Chinese government is concerned about rising air pollution in the country due to the ever increasing vehicles on the road. As a result, China's State Council announced a stricter standard for auto fuel recently, which will be promoted nationwide by 2017. These steps may damage the health of the auto industry in China.

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