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China June car sales up 48.5% on year

July 9, 2009

China’s passenger car sales rose 48 per cent in June from the same month last year, consolidating a remarkable recovery that has catapulted China to top position in the world vehicle market so far this year, according to semi-official data released on Thursday.
The strength of China’s vehicle sales – total vehicles sales rose 18 per cent for the first half year to 6.1m from the same period last year – has surprised auto market analysts, government officials and even the country’s automakers, many of whom are scrambling to produce enough vehicles to meet demand. Some auto dealerships have reported shortages of vehicles and western automakers, such as Volkswagen and General Motors, have had to sharply increase production at their Chinese joint ventures to meet local demand.
Like other sectors of the Chinese economy, car industry growth this year was jump-started by the government, which in January announced tax breaks on small cars and subsidies for vehicle purchases in rural areas.
But car segments that were not targeted by tax breaks or subsidies also saw strong growth in sales, auto industry analysts said on Thursday.
High levels of bank lending are also believed to have helped spur demand. China on Wednesday announced that new lending in the first half was Rmb7,400bn ($1,084bn), up 201 per cent year-on-year and equal to 150 per cent of full-year lending in 2008.
Lending for car purchases had not risen – most Chinese buyers buy vehicles with cash – but higher levels of liquidity in general fed through to more corporate purchases of vehicles, analysts said.
General consumer confidence was also a strong factor in sales growth, said Mike Dunne, of the auto consultancy JD Power in Shanghai.
“The government is putting out a strong message that the financial crisis is concentrated in the US, but we in China are doing just fine. The world might be hurting, but not us,” he said.
He added that the impact of that message on car buyers “should not be underestimated”.
JD Power recently revised its 2009 forecast for Chinese passenger car sales to 7m, from 5.8m at the beginning of the year, and said that a further upward revision is possible.
Total vehicle sales rose 36 per cent in June year-on-year, the official Xinhua news agency said on Thursday, quoting figures from the China Association of Automobile Manufacturers.
It was the fourth month in a row that sales had exceeded 1.1m units.
The strength of the Chinese market is providing a rare ray of hope for western automakers already operating in China, and attracting companies like Fiat, long a laggard in China, to the market.
Earlier this week, Fiat signed a joint venture agreement with Guangzhou Automobile Group to make cars and engines in China from 2011. Fiat and GAC said the venture would have the capacity to produce 140,000 cars and 220,000 engines per year initially, but could later be expanded to produce as much as 250,000 cars and 300,000 engines annually.
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China overtakes US as world’s top car market

February 11, 2009

CHINA overtook the United States as the world’s largest auto market for the first time when it sold more cars, 735,500 units, in January, the China Association of Automobile Manufacturers said yesterday.

But the January figure was a drop of 14.35 percent year-on-year and this indicated that sentiment in China’s auto industry is still in a downtrend because of a global financial crisis. Analysts, however, agreed that the market showed signs of an early recovery with government support and lower fuel prices.

Vehicle sales in China rose 6.7 percent to 9.38 million units last year. Sales may grow 5 percent this year, the slowest pace since 1998, CAAM said earlier.

January vehicle sales in the US plummeted 37 percent to 656,693 as more auto makers closed down plants and laid off thousands of workers.

The association reports said China’s passenger cars dropped 7.77 percent to 610,000 units last month, following a 12-percent slump in December

But the slower drop in sales was helped by the central government’s measures such as cutting fuel prices and halving a vehicle sales tax on small cars to counter a slump in the automotive industry since August last year.

“The fuel tax reform and tax cuts work effectively as sales of vehicles powered by 1.6-liter engine or less enjoyed rapid growth from a month earlier,” Zhu Yiping, a director at CAAM, said. “This helped passenger car makers to cut inventory by 80,000 units.” He added that the overall stockpile of Chinese car makers also hit its 13-month low.

Selling commercial vehicles remained tough due to the economic situation as their sales plunged 36.46 percent to 125,100 units in January, CAAM said.

China announced a 4-trillion-yuan (US$586 billion) economic stimulus package and favorable policies including tax cuts and road-toll abolishment in January to spur demand.

However, most analyst cautioned that the sales pickup won’t last long and they remain skeptical that China would remain the world’s biggest car market for the year.

“We should not be too optimistic as the impact of favorable policies may be weaker as time goes on,” said Rao Da, secretary general of China Passenger Car Association. “Sales of vehicles with engines larger than 1.6 liters are not expected to boom and overall sales will still be hampered by a weak economic outlook and lower exports.”

Source: Shanghai Daily

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Cummins to invest additional US$300 million

October 25, 2005

The world’s leading diesel engine producer, Columbus, Indiana-based Cummins, announced here on October 14 that it will add US$300 million worth of investment in China in the next five years. The company also plans to expand its business volume in China from $1 billion in 2004 to $3 billion in 2010.

After 30 years of development, China has become the largest overseas market for Cummins in the world, said Tim Solso, board chairman and CEO of Cummins. As the Chinese auto market


expands gradually and demand for auto parts and components rises sharply, Cummins sees a huge market space and development potential in China, said Solso.

He added that long-term cooperation between Cummins and its Chinese partners had also laid a solid foundation for the American company’s future development in the country. Cummins has so far invested US$140 million in China and owns 12 companies and enterprises in the country.

New investments will be earmarked for the joint venture production of 11-liter engines with the Shaanxi Automotive Industry Corporation in Xian, the cooperative development of new-generation of 13-liter heavy truck engines and exhaust systems with Dongfeng Motors Co Ltd, and the production of natural gas engines in China.

In addition, investment will also be allocated to the R&D center, which has been jointly set up by Cummins and Dongfeng Motors Co Ltd. In order to let its board members feel the strong vigor of the Chinese market and Cummins business in China, Cummins held its 2005 global board meeting in China, from October 8 to 14. It was the first time in the last 15 years that Cummins had held a global board meeting in a place other than the United States.

Cummins, a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Cummins serves customers in more than 160 countries and territories through its network of 550 Company-owned and independent distributor locations and more than 5,000 dealer locations. With more than 28,000 employees worldwide, Cummins reported sales of $8.4 billion in 2004.

The company is organized into four distinct but complementary business units. The Engine Business manufactures and markets a broad range of diesel and natural gas engines and aftermarket products for automotive, industrial and power generation applications. Cummins engines can be found in medium- and heavy-duty trucks, buses, recreational vehicles, light commercial vehicles and pickup trucks in on-highway applications, and in equipment in the construction, mining, agriculture, marine, rail and government markets.

The Power Generation Business is a global provider of power generations systems, components and services in standby power, distributed power generation, as well as auxiliary power in mobile applications to meet the needs of a diversified customer base.

The Distribution Business consists of Cummins wholly- owned and majority-owned joint ventures that provide Cummins products, parts, and service through more than 116 locations in nearly 80 countries and territories worldwide.

The fourth business unit is the Components Business, organized into four groups: Fleetguard (liquid and air filtration systems and Nelson acoustic exhaust systems found in heavy-, medium- and light-duty trucks), Emission Solutions (a provider of total system solutions that help customers meet the growing requirements to reduce oxides of Nitrogen (NOx) and particulate matter (PM) emissions from engine and power plant exhaust), Holset Engineering Co (designs and produces a comprehensive range of turbochargers and related products for diesel and gas engines in the 3.8 to 25 liter turbocharger range targeted primarily at the commercial vehicle and industrial markets), and Fuel Systems (designs, manufactures and remanufactures fuel systems for use on Cummins and other engines).

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