Mainland car sales surge 69pc

PUBLISHED : Tuesday, 09 December, 2003, 12:00am
UPDATED : Tuesday, 09 December, 2003, 12:00am

Sales in the mainland's car market grew 69 per cent in the first 10 months, but the momentum is expected to slow after two years of rapid expansion.

Car dealers sold 1.64 million units between January and October, up from 975,308 in the same period last year, according to industry consultancy Automotive Resources Asia.

Over the past two years, China's car market has grown more than 60 per cent annually.

The big car category, which accounts for 21.1 per cent of the market, led the way with 116 per cent volume growth.

Guangzhou Honda's Accord model posted a 68 per cent jump in sales to 70,115 units. Due to production capacity constraints, customers must wait more than seven months to buy an Accord and Guangzhou Honda plans to double capacity to 240,000 units by the end of the first quarter to shorten the waiting list.

Sales of rival Shanghai General Motors' Buick brand surged 135 per cent to 73,644 units - overtaking the Accord - after it launched new models with bigger engines this year.

Shanghai Volkswagen's Passat model remained the top brand in the category with sales rising 61 per cent to 97,453 units.

In the smaller saloon segment, which accounted for 39.8 per cent of the passenger car market, sales grew 48 per cent. Volkswagen, the dominant player, saw sales growth for its Santana and Jetta models lag rivals as competition intensified. The German carmaker and its joint venture partners had 33 per cent of the passenger car market, down from 41 per cent at the end of last year and 48 per cent in 2001.

The economy car segment grew 70 per cent, driven by Tianjin Toyota's Vios launched this year and Changan Ford's Fiesta, as well as sales growth for Zhejiang Geely's Geely and Changan Suzuki's Swift.

Daiwa Securities head of China research Alex Fan expected next year's passenger car sales to slow to 30 per cent, and a bigger proportion of car buyers would be middle-class consumers who were more price sensitive.

'These people will go further down the price list,' he said, adding it was important for manufacturers to price their cars according to their perceived quality or face poor sales and discounts later.

But the days of aggressive price discounting could be over, Automotive Resources Asia senior associate Yale Zhang Yu said.

Room for further price cuts in the full-size car segment is limited after substantial cuts earlier this year by Honda, while only one new brand - Nissan's Teana - is expected to launch late next year.

'Overall, price cuts will likely not exceed this year's level as prices of lower end cars are approaching international levels,' he said, adding average annual price cuts amounted to 7 to 10 per cent in the past two years.

The 80,000 to 150,000 yuan segment is expected to be the most crowded.