Mainland car sales accelerate 76pc to 3.5m units in quarter
Mainland car sales in the first three months of the year surged 76 per cent from a year ago to 3.52 million units, setting another quarterly record as the government prolonged support measures for the industry to the end of this year.
'Considering the potential bottleneck of urban infrastructure and petrol prices, we expect vehicle ownership to reach 130 million in 2014, implying annual sales of 25 million units by that year and a five-year compound annual growth rate of 13 per cent in sales,' Nomura International analyst Hou Yankun said.
'The sedan growth rate could slow due to congested urban roads, while crossover vehicles, such as sports utility vehicles, and light trucks could drive growth, given rising wealth levels in rural China and the well-developed infrastructure.'
Meanwhile, the mainland's leading carmaker SAIC Motor Corp said yesterday its first-quarter net profit surged 300 per cent from last year, thanks to the continuous robust car sales.
The A-share listed carmaker, which is a joint-venture partner with General Motors and Volkswagen, did not provide an earnings figure, but the company's first-quarter net profit last year was 626.94 million yuan (HK$712.64 million).
SAIC sold 890,000 vehicles in the quarter, up 63 per cent from last year. Quarterly results will be announced on April 28.
The company aims to sell three million vehicles this year, up from last year's 2.73 million.
Donghai Securities said SAIC had become an industry leader in the mainland's fragmented market with a market share of 19.9 per cent, up from 18.5 per cent last year.
However, analysts and industry executives estimate sales growth this year will be slower than last year, when sales reached 13.6 million units. They say the central government has scaled back on some support measures. For example, Beijing raised the consumption tax to 7.5 per cent for cars with 1.6-litre engines or less from 5 per cent last year.
The State Council raised the trade-in subsidy for older, higher-polluting vehicles to 18,000 yuan from 6,000 yuan, while rural subsidy programme of up to 5,000 yuan will be extended until January 2013.
Analysts estimate total vehicle sales will reach 15 million units this year.
State-backed SAIC is expected to be an industry giant with annual sales of two million cars this decade. The carmaker has said it will launch its first hybrid this year.
SAIC dominates the markets on the eastern coast. Its direct rivals are First Auto Work Group - the joint-venture partner of Volkswagen and Toyota Motor Corp - in the northeast, and central-based Dongfeng Motor Group, which has joint ventures with Nissan Motor, Honda Motor and PSA Peugeot.
In 2004, SAIC took acquired South Korea's Ssangyong Motor for US$500 million, but Ssangyong filed for bankruptcy protection in January last year after being hit by the economic crisis.
In 2007, the Shanghai carmaker acquired Nanjing Automobile for 2 billion yuan, as a way to 'generate synergies' for the eastern market. It restarted the MG marque with the MG TF LE500 in Britain last summer.