GM China’s sales are on a tear. November sales in China jumped 109.5 percent, Reuters reports, citing a company release. GM and its joint ventures sold 177,339 vehicles in November. As goes GM, so goes the Nation.
The Chinese nation. GM is a very close indicator for overall Chinese sales. In the past months, GM sales have been slightly better than the overall market. This indicates that once China’s overall November numbers are released, we will see the market to nearly double compared to November 2008.
According to the Wall Street Journal, GM’s sales analyst Mike DiGiovanni figures that overall auto sales in China rose 93 percent in November compared with the same period last year. He also figures (official numbers are not out for all markets) that this contrasts with 6.7 percent growth in Western Europe, 5 percent in Latin America and 2.7 percent in the United States. Keep in mind that we are now comparing current sales with weaker and weaker carpocalypse-afflicted months in the prior period. Single digit “growth” simply indicates that the patient has stabilized. Only solid double digit growth, as reported from France, or – odoroita! – Japan can be read as a sign that the patient is recovering.
China is healthier than ever. (Peak oilers and tree huggers may debate that statement.) According to the same WSJ analysis, China now accounts for one quarter of all cars sold worldwide. That is the highest proportion ever seen, and it is bound to grow higher (see below.) Manufacturers who don’t have a solid presence in China are on the endangered species list. China is pretty much the only savior of a beleaguered industry. “Auto makers are scrambling to secure a solid sales source as they contend with a slow economic recovery in the U.S. and a potential nightmare in Europe with the ending of scrappage incentives that artificially spurred consumer buying in countries such as Germany and Italy,” says the WSJ.
If the Chinese numbers come in as expected, more than a million new passenger vehicles have been registered in November. The boom in cars doesn’t prompt the Chinese government to take the foot of the gas. In the contrary. China has plenty of tricks in its bag to make car sales go even faster in 2010, Chang Xiaocun, a bureau director at the Ministry of Commerce official said to Gasgoo.
His ministry is considering schemes to trade in old vehicles for new ones at a discount, subsidized car sales in rural areas and tax breaks for smaller cars. Or all of the above. A continuation of this year’s tax cut is pretty much considered as a given. China’s overall auto sales are projected to reach 13 million units this year, up from 9.38 million units of last year. Sales in the first ten months this year grew 37.8 percent to 10.89 million units.
I hate to bring up the expression “irrational exuberance” – but is this growth rate sustainable? Are there quality issues with the vehicles being produced?
Superficially, China looks to be on a roll. However, amongst the shiny, new, glittering office towers and apartment blocks, I seldom read about hundreds of millions of Chinese that are stuck in low wage, semi-feudal, employment.
Irrational Exuberance. Exactly.
Triumph Of The Will-style propaganda. Bertel is Leni.
That is quite a spectacle in the video. Ain’t it?
Chinese GDP growth is as sustainable as US debt growth—it looks as if it’s gonna crash, but it hasn’t, for the past 3 decades.
Before you worry about the poor Chinese workers, why not exercise your constitutional power to ask Obama and Co. stop robbing poor Americans and do what he promised (withdraw troops) and hopefully save a few billions.
PeteMoran: Bertel is Leni.You can call me Joseph Goebbels, if you want. no skin off my back. But for you, I won’t have a sex change. I met Leni Riefenstahl in the early 90’s, and she didn’t look too good anymore either. As far as the numbers go: Everybody in the industry knows that China is where it’s at. You can do the ostrich and stick your head in the sand. It will just ruin your vision further. In the meantime, I reserve the right to report the numbers as I receive them.
PS: Did anyone notice that it is an American company, actually one owned by the American government, that leads those “Triumph Of The Will” propaganda statements?
Head in sand blurs vision.
You can do the ostrich and stick your head in the sand. It will just ruin your vision further.
My vision for China (and India) is a country that isn’t dependant on the personal car. As I’ve said before, in my workplace I’ve met high ranking Chinese energy officials who feel the same way and who are fairly determined that they won’t make the same mistakes as “The West”.
I also find it an amusing double standard that those from car the industry advocate that China be “just like the West; demand cars!”, but those same people yell “racist” when someone like myself says “hang on, consider that more carefully China, it isn’t sustainable(or necessary) for you”.
It’s also amusing to see the cheer-leading for China as the new infallible nation of economic miracle.
EDIT: Sorry again guys, edit again. (It’s late at night for me with an upset toddler).
Folks: The comment editing is busted on any browser than Internet Explorer. Sorry. We are bugging the wizards at Verticalscope daily to fix it, but it appears to be a tough one. If you want to edit, please do not create a duplicate post. Simply fire up Internet Exploder and edit away. This is not an enxdorsement for the browser, I like Firefox better myself. But whatever works.
PeteMoran: As for the high ranking Chinese officials, they obviously must have told you what they thought you wanted to hear. Nearly all large automakers in China are wholly or partly owned by the Government (central, provincial, even the city of Beijing has its very own auto maker, BAIC) and their interest definitely is to crank out as many cars as possible. Note the remark on the continuiation of the “market support” measures in 2010. If one market segment doesn’t need a stimulus package, then it’s the Chinese car market. But it will get its stimulus package. Privately, car makers are already worried about 2010, because the bar has been set so high in 2009. 15 % more than 13m cars will be 15m cars in 2010. But 15% doesn’t sound so good as 96%
Lastly, as long as it is ok that America owns 800 cars per 1000 people, we should allow other countries to own at least a fraction of that.
as long as it is ok that America owns 800 cars per 1000 people, we should allow other countries to own at least a fraction of that.
Why? Is it some divine gift? Who says it’s sustainable in any other country?
I suspect the Chinese better appreciate how expensive a car dependant culture is. Their energy people certainly appreciate the looming problem.
About that double standard, what do you think would be the typical American reaction if China asks us:”hang on, consider that more carefully America, it isn’t sustainable(or necessary) for you?”
A.) We think it over carefully and give out well reasoned response and why it was/is necessary.
or
B.) We ask them who the hell they think they are and what gives them any idea that they might have any right to question our way of living, then tell them where to shove it and eff off.
For 98%, it’s B. The rest have business or other ties to China. Who’s double standard is it anyway?
@ yzs
For 98%, it’s B.
Then the crash comes and everyone points fingers. Americans are so smart they don’t need to listen to advice; this from the nation that nearly sank the world financially.
Bertel,
My inquiry on sustainability really centers on whether or not this reported exponential growth is based on actual demand or incentives. Incentives or sub prime lending could be pushing 2010/11 sales into 2009. In short, does this exponential growth represent a bubble?
One other thing, given the plethora of regional players – I’d like to know which ones are making a profit on the vehicles they produce. GM, Chrysler and Ford had a good run pumping up the sales volume with incentives – but they lost money on almost every passenger vehicle they sold in the US. Now those chickens have come home to roost.
Last but not least, have you driven any of these cars from Beijing Auto, Brilliance, Chery, FAW or Geely. How do they compare with the run of the mill Hyundai or Toyota? Do they hold up past the warranty period? Will they still be on the road in 5 years or will the Chinese have to buy a new car every 3 years?
By the way, how good are the Chinese numbers?
I read somewhere that China’s car sales numbers were rising much faster than the comparable numbers for oil imports (and maybe gasoline refining).
Any evidence that car sales data is being massaged?
Cashmoney: You distrust the numbers provided by a company owned by the US government? We have the IP number from which you posted this, expect a visit from the Secret Service soon.
Seriously, that alleged gasoline sales to car growth disconnect had been made up by Glenn Beck’s buddy Gordon Chang, and debunked by TTAC. Chang is lacking rudimentary math. China can do a lot other countries can’t. But even China can’t secretly buy 13m cars and hide them under a giant tarp in the Gobi desert. Google would find them.
Chang — that’s the guy. I remember the story floating around and then disappearing but I was too busy to chase it down. Thanks.
No, China couldn’t buy 13m cars and hide them. But if it wanted to juice car registration stats, it’d be as easy a scam as finding new voters at the nearest cemetery.
Oldandslow:
My inquiry on sustainability really centers on whether or not this reported exponential growth is based on actual demand or incentives. Incentives or sub prime lending could be pushing 2010/11 sales into 2009. In short, does this exponential growth represent a bubble?
No. Compared to what other countries dish out in cash-for-clunker etc. money, the Chinese incentives are rather benign. So they cut the sales tax for cars of 1.6 l or less from 10 % to 5 %. On a $5000 car, that’s a savings of $250. Yawn. Sub prime lending? Chinese mostly buy their cars in cash. China is at the beginning of motorization. According to Wikipedia, China has 17 cars per 1000 people. Ok, lets assume they are wrong. Let’s call it 50 cars per thousand. A far cry from 800 cars per thousand in the US, 195 in Russia, 382 in Poland, or 488 in Slovenia. China has a huge market, and it just has begun to grow.
Last but not least, have you driven any of these cars from Beijing Auto, Brilliance, Chery, FAW or Geely. How do they compare with the run of the mill Hyundai or Toyota? Do they hold up past the warranty period? Will they still be on the road in 5 years or will the Chinese have to buy a new car every 3 years?
Most of the cars built in China are built by joint ventures, built with the same technology, with the same methods and according to the same standards. They actually ARE run of the mill Hyundais, Toyotas, Volkswagen, Buicks. Just as good, just as bad. A little $5000 QQ will shake, rattle and roll when driven at high speed. You get what you pay for.
I see GM levels of denial on this post.
@ yzs
What exactly is being denied?
Before you worry about the poor Chinese workers, why not exercise your constitutional power to ask Obama and Co. stop robbing poor Americans and do what he promised (withdraw troops) and hopefully save a few billions.
No dice, he’s going in a bigger vay. It ain’t over yet.
will the Chinese have to buy a new car every 3 years?
Is hard to say, whether their cars can last longer than 3 yrs whilst not fare so well during in a crash.
Ours mostly last 3 rs until the Warrantee dies. And ours may last much better in a crash.