Fears of rising fuel prices put the brakes on Chinese car market sentiment
Despite a dip in confidence, car ownership and plans to buy both climbed in September, according to MNI survey
The possibility of rising fuel prices shook consumer confidence in the Chinese car market last month, with sentiment falling despite plenty of enthusiasm for buying vehicles, according to a new report.
MNI’s monthly China Car Purchase Indicator - which gauges overall conditions in the car market - slipped 2.2 per cent in September, ending the third quarter on a slightly weaker note, according to the survey results released on Wednesday.
The fall was due to heightened expectations of fuel price rises, with most consumers anticipating petrol and diesel costs to increase in the coming year. Oil prices have been on the rise since OPEC agreed last week to cut production for the first time in eight years.
Despite the dip, reported car ownership and plans to buy were both up, with 12.1 per cent of respondents saying they planned to buy a car in the next year, up slightly from 11.9 per cent in August.
“While Chinese consumers remained enthusiastic about the car purchasing environment, a rise in expected running costs weighed on overall sentiment towards the car market,” MNI Indicators senior economist Andy Wu said.
The Car Purchase Expectations component, which measures whether consumers thought it was a good or bad time to buy, was largely unchanged at 102.9 in September, compared with 102.7 in August.
“The relative stability in car purchase expectations, still above the neutral 100 level that separates optimists from pessimists, may suggest car sales will help underpin overall market sentiment in the near term,” Wu said.
Meanwhile, car registrations were up 34 per cent year-on-year in August, maintaining the strong momentum seen in the last few months, according to a Jefferies industry note.
Great Wall Motor, China’s largest sport utility vehicle maker, saw its registrations up 34 per cent in August, with Coupe models increasing 63 per cent year-on-year, the best monthly sales on record.
Guangzhou-based carmaker GAC Motor saw August registrations leap 42 per cent year-on-year, with Honda up 32 per cent and Fiat up 132 per cent. Registrations for Toyota vehicles were down 1.5 per cent.
But Jefferies equity analyst Zhi Aik Yeo cautioned against getting “too caught up with the sales rally”, saying the strong sales might be at the expense of pricing.
The growth strength is likely to wane in October due to a high base, Yeo said.
MNI’s research also found that Volkswagen remained the preferred brand of choice for Chinese consumers, accounting for 25.3 per cent of responses, slightly down from 26.6 per cent in June.
Honda was in second place, with a 12.2 per cent share after only 7.4 per cent of respondents picked the brand as their favourite in June.
Chinese consumers were most concerned about safety when making a purchase, with 58.3 per cent saying that was the main factor they considered when making a purchase, while 12.8 per cent said price was more important.
MNI interviewed at least 1,000 respondents in first, second and third tier Chinese cities to collect the data.