Newly released models give market shot in the arm
Light vehicles sales were up significantly in April due to gains in the market for passenger cars.
A total of 1.8 million light vehicles were sold, up 13.2 percent year-on-year.
Passenger vehicle sales surged 16.4 percent year-on-year to 1.35 million units, while light commercial vehicle sales only rose 4.7 percent to 460,000 units.
The strong showing in the market for passenger vehicles was mainly attributed to the impressive performance of the SUV segment.
The sales of this segment in April jumped by 43.3 percent, or 279,586 units. It was partly due to the tremendous popularity of the Haval H6 and the launch of several new models, such as the Ford Kuga, the Ford Ecosport, the Chang'an CS35, the Peugeot 3008 and the Audi Q3.
The projection of annual sales based on April figures rose 2.7 percent from last month to 22.02 million units.
The overall estimate for annual passenger vehicle sales unsurprisingly reached another peak in 2013 of 16.84 million units, up 4.5 percent from last month, while the figure for light commercial vehicles remained low at 5.2 million units, down 5.2 percent.
The average annual projections for the past four months of 2013 reached 21.5 million units.
Though dealers ended the process of liquidating their inventories in January and began building up them up once more, the inventory level has not risen significantly.
According to the China Automobile Dealers Association, the vehicle inventory alert index dropped from 50.96 percent in March to 50.35 percent in April. The inventory index in March also declined to 1.63, which is slightly higher than the alert level of 1.5.
The combination of several important factors has driven new car sales in China.
First, incentives provided by the dealers in 2013 boosted sales.
Second, a large number of new models and facelifts launched during the Shanghai auto show have sparked buying sprees.
On one hand, if we look at the economic data, we find that both risks and opportunities exist in the Chinese market.
In the first quarter of 2013, the economic recovery failed to meet expectations.
However, the contribution of consumer spending to total GDP growth has for the first time outweighed the contribution of fixed-asset investment, clearly indicating that the government is taking some measures to rebalance the economy. Investment is not picking up as expected.
According to the nation's 12th Five-Year Plan (2011-15), urbanization will become the focus of China's economic growth in the future.
This will lead to increased investment in urban infrastructure and construction, partially offsetting the effect of China's economic slowdown. The economy's overall trend of expansion remains unchanged.
On the other hand, sections of the property market have begun to heat up again recently.
Housing bubbles are emerging and a shadow banking sector is growing rapidly.
These factors have brought on some uncertainties for the Chinese economy.
Taking into account all of these factors, we have decided to raise our short-term sales forecast for 2013 passenger vehicle sales to 16.07 million units, up 12.8 percent.
The forecast for light commercial vehicle market sales declined to 5.3 million units, down 6.2 percent.
We have also slightly raised our long-term forecast for passenger vehicles and reduced our long-term forecast for light commercial vehicles.
The writer is a market analyst at LMC Automotive, who can be contacted at XCui@lmc-auto.com