Foreign car makers in china no longer enjoy a feast of sales, but market still offers good fare compared with Europe

The Chinese auto market last year may have failed to bounce back to the record highs of a few years ago, but it has performed well enough to provide the bread and butter for foreign car manufacturers struggling in Europe.

Last month, 1,559,735 passenger cars (sedans, sports utility vehicles, multipurpose vehicles and minivans) were delivered across the country, a year-on-year increase of 8.6 percent, the China Passenger Car Association says.

Sales for 2012 reached 14,682,215 units, up 6.8 percent on the previous year.

This number looks decent compared with those for the European and US car markets, and indicates the Chinese market is slowly recovering from the decline of the past two years, although it is very unlikely it will return to the glorified heights of 2009, when the growth rate hit 40 percent.

Dong Yang, vice-chairman of the China Association of Automobile Manufacturers, says the figures does not reflect a stagnated market, but rather the start of a healthier and steadier growth path.

"I don't want the market to go back to 2009 as it was not sustainable. And I can foresee that the auto market in 2013 will grow steadily as the impact from the negative policies fades away, and automakers benefit from the new round of government purchases."

European and US brands have also managed to boost sales in China. The leading European manufacturer Volkswagen Group has not made public its total sales for last year, but the company reported that deliveries in the first 11 months topped the 8 million mark for the first time over this period.

China and North America are the major markets for Volkswagen. During the first 11 months of 2012, deliveries of VW models in North America soared by 31 percent. The company says it aims to reach the 10 million mark by 2018.

One of Volkswagen's two joint-venture partners in China, SAIC, has reported annual deliveries of 1.28 million, 10 percent higher than the previous year. The other partner FAW has yet to issue figures, but analysts estimate sales will be around 1.35 million.

The number of exported models is increasing, but only forms a fraction of Volkswagen's total sales, at about 80,000 units last year.

A boycott by Chinese consumers of Japanese brands, as a result of the territorial dispute over the Diaoyu Islands, has helped Volkswagen and GM expand in China.

Auto analysis estimated that Japanese brands have lost at least 30 percent of sales volume. Toyota, for instance, projected overall sales in 2012 at 1 million, 10 percent of its global sales, but it sold 840,000 units, down 5 percent from the previous year.

GM China has remained on its high perch in terms of sales over the past three years. It reported on Jan 9 that it had delivered 2.85 million vehicles last year, up 14.7 percent year-on-year. Its Chinese joint venture SAIC-GM was sales champion in China with 1,392,658 deliveries (Chevrolet, Buick and Cadillac).

The resilience of the Chinese market has more or less offset the European downturn for GM. From January to November, the company's deliveries in Europe were down by 12.5 percent.

Ivan Hodac, secretary-general of the European Automobile Manufacturers Association, says nobody makes money today in Europe, and the European market shows no signs of a quick recovery this year.

"The only companies that are still doing well are companies in the export market, such as Volkswagen, BMW and Daimler."

Mary Barra, GM's senior vice-president of global product development, told Bloomberg that "we believe we're well positioned in the important growth markets", such as Brazil, India, Russia and China.

Ford may not yet be able to compete with GM China, but it is growing fast. Last year it sold 626,616 vehicles in China, 21 percent higher than in 2011. Last month, the delivery hit a record high of 70,510 units, up 43 percent year-on-year.

John Lawler, CEO of Ford Motor China, says consumers' reaction has firmed up Ford's plan to introduce 15 new models to China and to double production capacity by 2015.

Volkswagen's sister brand Audi AG successfully defended its leading position in the Chinese premium car segment. Last year, the brand sold 405,838 vehicles in China, nearly 30 percent more than the previous year.

The Chinese market is the superstar for Audi AG. Since the 1980s, when it was chosen as the government car brand, Audi has managed to maintain a high-end, elegant image.

Although its German rivals BMW and Mercedes-Benz are catching up in sales volume, it will not be easy to steal Audi's crown. The brand also expanded its dealerships from 230 to 290, in 130 Chinese cities.

Imported Audi models are also becoming more popular. Last year more than 83,000 models were imported, 36.2 percent higher than the previous year. Sales of domestically produced models (Audi A6L, A6L and Q5) rose 28 percent to more than 322,000.

Another premium brand, BMW (including MINI), followed Audi, selling 326,444 cars, a surge of 40 percent over the previous year. This is also the first time that BMW has sold more than 300,000 vehicles in China in a single year.

Mercedes-Benz, however, found it hard to make a breakthrough in the Chinese market, especially with two strong opponents riding ahead.

Last month, the brand delivered 18,910 cars, down by 19 percent year-on-year. Total deliveries for 2012 increased slightly by 1.5 percent to 196,211.

Overall, the Chinese market remains the bread and butter of these foreign brands, and at times it is even being used to nourish the struggling European market.

In October, the Volkswagen CEO Martin Winterkorn said the company will ship 200,000 vehicles to China in 2013 because stalled European markets cannot digest the inventory.

wangchao@chinadaily.com.cn

(China Daily 01/11/2013 page16)