China's Car Sales Surge -- Again!

Increased inventories may account for some of the increase. At the end of March, dealer inventories stood at 40 days, compared to 34 days at the end of January. The additional inventory accounted for approximately 37 percent of the increased unit sales. Had dealer inventories remained at January levels, sales would have increased by 13.6 percent — still a healthy rate of increase by any measure. Interestingly, dealer inventories for both the local and global assemblers at 41 days and 39 days, respectively, are down from their levels during the second half of 2012.

At the end of March, the local brands accounted for 35.1 percent of China’s passenger car sales, up from 32.9 percent at the end of last year. Most of the market share gain came at the expense of Japanese assemblers, whose market share sank to 15.8 percent from 19.1 percent at the 2012 year end. Sales of Japanese cars in China have been suffering over the past nine months due to the ongoing dispute between China and Japan over ownership of the Diaoyu Islands in the East China Sea.

The big winners during the quarter were Chang’an, up 121 percent, Great Wall, up 53.2 percent and Geely and BYD , both of which increased by about 25 percent. In terms of models, the SUV segment outpaced the overall market, with first-quarter sales up 40 percent. Sales of low-end SUVs rose 47 percent, due in large part to new model launches.

The strength in China’s car market during the first three months is all the more surprising given that the economy as a whole has underperformed so far this year. On Monday, China’s National Bureau of Statistics reported that the country’s economic growth slowed in the first quarter to 7.7 percent, down from 7.9 percent in the fourth quarter of 2012 and below a widely expected 8 percent rate of increase.

China’s strong auto market is sure to put smiles on the faces of the participants of this year’s Shanghai Auto Show, which is expected to be the largest international motor show in the country’s history. The annual auto show in China, which alternates between Beijing and Shanghai, will officially begin on Sunday, April 21 and will run through April 29. Journalists will get an early look at the new models, however, on Saturday,  when the show will be reserved for them on Media Day.

And there will be a lot for them to see. China is now the largest auto market in the world, and already accounts for more than 23 percent of the total annual production of vehicles globally. As a result, every major industry participant will be represented in Shanghai in the coming weeks. Nearly 2,000 automobile and component manufacturers from 18 countries and regions will be present at the event. Some 1,300 vehicles will be showcased, including 111 world premieres and 49 Asia debuts. There will be 69 concept cars and 91 alternative-energy vehicles on display. More than 800,000 people are expected to visit the show, and an estimated 10,000 reporters will cover the show on site.