Lunar New Year Buying Drives China Car Sales Higher – Wall Street Journal

Posted: Friday, February 19, 2016

Attendees looked at a Volkswagen Golf R Touch at a car show in Shanghai in May.
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SHANGHAI—Sales of new cars in China in January rose 9.3% from a year earlier, as demand increased in the run-up to the Lunar New Year holiday.

Sales of new cars—sedans, sport-utility vehicles and minivans—rose to 2.23 million vehicles in January, the government-backed China Association of Automobile Manufacturers said in a statement Friday. Total vehicle sales, including trucks and buses, rose 7.7% to 2.5 million.

The month leading up to the Lunar New Year holiday is typically the peak sales season for the car market, as Chinese consumers spend on big-ticket items like televisions, air-conditioners and automobiles. The Lunar New Year fell in early February this year.

“The growth was not bad for a market that sells more than 20 million cars a year,” said Boni Sa, an analyst at consultancy IHS
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Automotive. “In the coming months, we think growth of new-car sales will likely moderate as China’s weak economic situation may hurt consumer confidence,” he said.

The Chinese car market has bounced back from a contraction in the summer of 2015, thanks to incentive programs from the central government, include a halving of the 10% purchase tax on small-engine cars.

IHS expects a 6.3% increase for China’s new car sales this year. The manufacturers’ association says passenger-car sales will grow 7.8% to 22.76 million this year.

In January, most car makers reported solid sales gains. Sales for General Motors Co.
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and its joint ventures in China rose 7.3% from a year earlier to about 421,000 vehicles. Volkswagen AG
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, which includes its namesake Volkswagen brand, luxury car maker Audi AG
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and sports car maker Porsche Group, sold 400,100 cars, up 14% from a year earlier. Toyota Motor Corp.
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posted a 32% rise for its China sales to 125,000 cars.

Nearly all car makers are increasing their investments in China, even as new-car sales growth has slowed to single digits from double-digit rates in the previous decade.

GM plans to introduce 13 new and refreshed models this year in China. Ford has said it would invest $1.8 billion through 2020 in China to cater to Chinese consumers’ demand for greater smartphone connectivity and autonomous driving. Renault SA
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in January started building its Kadjar SUVs in China after more than a decade of selling its imported vehicles there.

In January, the crossover and SUV segment recorded strongest growth, up 61% from a year earlier. Sedan sales continued to suffer from rising demand for SUVs. They fell 9.1%.

Chinese car brands’ share of the market rose to 45.5% in January from 42.4% a month earlier, while German brands rose to 20% from 15%, U.S. brands fell to 12.1% from 12.8% and Japanese brands dropped to 13.4% from 17.4%.

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