Top 10 Occupies 二分之一 of the whole SUV market and Japa
The sales of SUV now keep speeding up and leads the market of passenger cars. At the same time, the market concentration also keeps improving. In accordance with the data from China Association of Automobile Manufacturers, in October and November, the ratio of top 10 models in SUV occupies 52.92% and 52.54% respectively. This data in first half of year was only 50%. It is reported that few self-owned brand such as Great Wall Haval attracts more and more attention in SUV. According to the analysis, it is due to the dislocation competition strategy of self-owned brands. In 3-tier and lower market, self-owned brands are superior in popularity. But it is uncertain for self-owned brands to keep speeding up when Japanese & Korean brands join the competition.
As usual, the demand of auto market in January should be the highest. Many customers who have purchasing plan will buy cars after getting year-end bonus. But this year is different. As the research shows, the sales of passenger cars in January 2015 was as bad as September 2014, holding the line on month-on-month basis and increasing by 10% on year-on-year basis. The growth less than 10% of passenger car market will be common in the future.
Great Wall Motors, once heralded as China's most promising own brand manufacturer, has recently attracted doubt concerning its future prospects. Instead, many in the country are looking towards Changan Automobile to become the country's new leading own brand manufacturer. The information comes from a new report from the Gasgoo Automotive Research Institute, one of the country's most authoritative sources on the automotive industry.
From the beginning of this year, Chinese SUV market keeps increasing rapidly. In accordance with the data from China Association of Automobile Manufacturers, the sales of SUV in November were 301,300 and the year-on-year growth was 59.24% which was much more than 9.19% for small cars and 16.08% for passenger cars. The sales data of first 11 months was 2,673,900 for SUV and year-on-year growth was 49.11%. The data for small cars and passenger cars was 11.15% and 15.10%.
In January, China Automotive Industry Association had mentioned the growth rate of Chinese auto market would be around 7% as same as Chinese GDP and the sales volume would be 25,130,000, among which domestic sales volume would be 24,270,000 and exporting sales volume would be 860,000. The related data shows the production and sales volumes were 23,722,900 and 23,491,900 in 2014, increasing by 7.3% and 6.9% on year-on-year basis. The growth rates of production and sales in 2014 declined by 7.5% and 7% on year-on-year basis. Chinese Automotive Technology & Research Center was more confident for auto market in 2015 and thought the growth rate would be 9% due to subsidy policy quitted and new energy vehicle accepted. Many securities dealers also thought the growth rate would be between 7% and 9%. Auto enterprises are also cautious about the growth. The sales target of Beijing Hyundai in 2015 is 1.16 million and growth rate is 3.5. The data for Toyota are 1.1 million and 6.8%. 2 million and 10% are the target for Shanghai Volkswagen.
According to data, the Chinese passenger automobile market maintained stable growth over the first four months of this year, with year-on-year growth exceeding 10 percent. Among them, own brands' passenger automobile sales are slightly lagging behind, with cumulative sales totaling 1.98 million units, representing year-on-year growth of 7.6 percent. Among them, the industry's so-called 'dark horse' last year, Great Wall, has seen its sales fall in three of the four months. It only managed to sell a total of 203,300 units over the four month period, equivalent to negative year-on-year growth of 1 percent.
The market concentration keeps improving at the same time. The data shows that Top 10 brands of Chinese market include Volkswagen Tiguan, Honda CR-V, Great Wall Haval etc.,whose total sales were 647,400, occupying more than 50% of total SUV market. Although the market of SUV keeps expanding and more new models are brought in, customers tend to be more rational and are willing to choose brands with good fame & quality.
Many research institutions forecast the growth rate of Chinese economy will keep 7% which is the lowest during past few years. Auto market enters into stable stage due to slow GDP growth. Customers tend to be more rational due to structural adjustment of macro economy, low demand and continuous deflation, which is a bad news for auto market. Auto enterprises will use all skills to response, among which new cars are most useful. As reporters analyses, there had been 36 new cars during past January. There will be more than 30 important SUV models and China Automotive Industry Association forecasts the sales volume of SUV will be 5,100,000 and the growth rate will be 25%. The effect of policy won't be as big as past few years.
Its recent setbacks in the capital market have also attracted the attention of Great Wall's naysayers. Following an announcement made in January that it would delay its listing on the market, Great Wall announced earlier this month that it will completely overhaul its breakthrough Haval H8 and that, due to quality issues, it would once again delay its market listing.
In this background, Japanese brands and few self-owned brands benefit a lot.
This stable growth of auto market has both advantage and disadvantage for distributors. The advantage is the stock pressure for distributors will be less but the stock reserving will be more difficult at the same time. This situation will be helpful for market price and enterprise operation. The disadvantage is the price-off promotions will be less effective due to stable demand of auto market in peak period. Besides, this growth raises requirements of operation capacity for distributors.
These pieces of news have done their part in affecting the performance of Great Wall's stock. After trading for Great Wall stock resumed on May 9, the company's H shares fell a total of 20.43 percent, equivalent to a loss of HK$16.8 billion . The company's A shares suffered a similar fate, falling from a high of over 50 RMB per share to just around 27 RMB .
According to Mr. Chi, the general manager of Beijing Beichen Asian games village automobile exchange market, “Honda and Toyota have become 2 Japanese brands attracting great attention.” In October & November, Honda CR-V and Toyota RV4, Highlander come into top 10. In November, Toyota RV4 and Highlander ranks 3th and 9th. Among self-owned models, Haval attracts most attention. According to related data, the sales of Haval were 37,300 in November and the year-on-year growth was more than 40%. The total sales of Haval were 346,100 from Jan. to Nov. and the year-on-year growth was over 60%. Besides, BYD S6 performed well in November. The sales in Nov. were 7900 and the year-on-year growth was nearly 30%.
China Automotive Industry Association predicts the sales volume of saloon car will be 12,510,000 and the growth rate will be 1% in 2015. This data for SUV and MPV are 5,100,000, 25% and 2,580,000 and 35%. 1,060,000 and -20% are the data for multi-purpose passenger cars. The total sales volume of passenger car in 2015 will be around 21,250,000 and the growth rate will be 8%./
Having analyzed Great Wall's market trends, the Gasgoo Automotive Research Institute has arrived at a few conclusions. First, Great Wall Motors lacks a clear sustainable development plan, with its prior development due to being in the right place at the right time. With more and more manufacturers entering the SUV market and the market growing increasingly fierce, Great Wall's competitive advantage isn't nearly as clear as before. As other competitors in the SUV market are prepared for this level of competition, Great Wall still holds on to its previous passive strategy, which excessively relies on a single segment.
Mr. Chi said, “Although self-owned brands have attracted lot of attention but the potential customers are quite different from Japanese brands.” The main markets of self-owned brand SUV are 3-tier & lower cities. Self-owned brands still cannot compete with joint venture brands. He added, “Joint venture brands now are expanding their channels to 3-tier & lower markets. If self-owned brands didn’t improve their brand influence, they would lose the advantage in 3 tier & lower cities.”/
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