China Autos Report Q1 2012

Includes 3 FREE quarterly updates

Year-on-year (y-o-y) growth of 10% in the our Core Europe grouping (Germany, France, the UK, Spain and Italy) during August has done little to change our forecast of a cumulative 3.4% contraction in the region by end-2011 and a modest 3.1% growth in 2012. With more than a fifth of Spain's workforce out of employment (as of June 2011) and the Italian economy stalling under a debt burden, the increasing weakness in the German, French and UK markets – the previous outperformers – give us reason to expect that H211 is likely to be significantly worse than H111. Although we have downgraded our growth forecasts for each of the bloc's major economies, including France, Germany, Italy and Spain in 2012, we expect 3% growth in new car sales in the region to mostly come on the back of favourable base effects. There are downside risks to this forecast if Italy’s and Spain’s new car markets enter 2012 during a contraction. A Greek default could further hit confidence and bank lending in the region.

A host of factors, ranging from the ongoing shortage of some passenger car models from leading Japanese brands and Hurricane Irene, which closed some dealerships towards the end of the month, were held responsible for anaemic 2.1% y-o-y growth in US car sales in August. We expect broader economic pressures and the renewed fiscal stimulus to weigh heavily on consumers’ minds. We believe 2011 US autos sales growth will therefore be limited to 5%. We do not believe that the US is headed into recession in 2012, but in line with our view of a weak consumer segment, we expect new car demand to grow at an unimpressive 2% during the year.

Domestic Troubles

Demand in some of the major EMs has fallen victim to domestic economic pressures and government regulation.

• In Brazil, a combination of inflationary trends, rising lending rates and import restrictions saw new car sales contract for a second consecutive month in August. But BMI expects demand to slow further during the remainder of the year amid fears that debt problems in Brazil could be on the rise and the fact that the average rate of interest on consumer lending stood at 47% as of May this year. Both factors mean that current credit conditions in the country are simply unsustainable. Moreover, with inflation passing 7% y-o-y in August, we believe that the market is set for more modest 6.9% growth in new car sales in 2012.
• Similar inflationary pressures and the consequent increase in the running costs of vehicles in India prompted Indian consumers to demand 10% fewer cars in August this year compared with the same period last year. Sales in the first five months of the financial year (April to July) contracted 1.3%. While this puts downside pressures on our forecast of 12% growth in the current financial year, we are adopting a 'wait and see' approach ahead of the upcoming festival period, which traditionally spurs sales. In 2012, we see demand growing a more modest 9.1%.

Slowdown: Blame It On Outsiders

• China's slowing from rapid growth in previous years continues. Car sales in August were up only 3.3% y-o-y compared with 6.7% in July, putting eight-month sales up 4.9% y-o-y, in line with our expectations of full-year growth of 5%. This is largely owing to the outside threat of a double-dip scenario in the US, which would significantly impact Chinese exports and the wider economy, plus the ongoing effects of the withdrawal of car sales incentives. For 2012, we are forecasting real GDP growth of 8.1%, which should take vehicle sales growth up 18.5%.
• Growth in the emerging European countries (comprising Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia) will rest entirely on the strength of economic growth in Western Europe, although favourable base effects could add some upside risks to vehicle demand. With consumers refusing to take on new debt and the economic recovery looking very fragile, a 1.3% y-o-y contraction in the sales of new cars during the January to August period closely aligns with BMI's expectations of a 1.8% y-o-y fall in the full-year figure. After four consecutive years of contraction in the new cars market, we believe that the emerging Europe market should return to positive territory in 2012 with modest 5.5% growth.

Contents

Executive Summary
SWOT Analysis
China Autos Industry SWOT
China Political SWOT
China Economic SWOT
China Business Environment SWOT
Global Overview
Industry Trend Analysis – Economic Woes Weigh On Car Demand
Table: Passenger Car Sales (Units), Jan-August 2011
Developed Slowdown
Domestic Troubles
Slowdown: Blame It On Outsiders
Asia Pacific Regional Overview
Thai Floods Threaten Regional Car Sales
Business Environment Ratings
Table: Business Environment Ratings -- Auto Industry Asia Pacific
Macroeconomic Forecast Scenario
Table: China - Economic Activity, 2007-2015
Industry Forecast Scenario
Production And Sales
Table: China Autos Sector: Historical Data And Forecasts, 2009-2016
Trade
Table: China Autos Sector: Historical Data And Forecasts, 2009-2016
Industry Developments
Passenger Vehicles – Forecast and Analysis
Production And Sales
Table: China Autos Sector: Historical Data And Forecasts, 2008-2015
Company Developments
Premium Segment
New Energy
All Change
Turnaround Begins At Home
Commercial Vehicles – Forecast and Analysis
Production And Sales
Table: China Autos Sector: Historical Data And Forecasts, 2009-2016
Company Developments
Motorcycles – Forecast and Analysis
Motorcycles
Table: China Motorcycles Segment: Historical Data And Forecasts, 2009-2016
Company Developments
Suppliers - Analysis
Company Developments
Company Monitor
Company Profiles
Shanghai GM
Volkswagen
Ford Motor
Daimler
Country Snapshot: China Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Manufacturing Wages, 2005-2012 Skip to top