[Quote] The car market such as a "roller coaster" positive growth throughout the year settled

author：newstime：2011-12-13

This year's Chinese auto market has caught all car manufacturers off guard. As the year-end approaches, many companies are far from reaching their sales targets set for 2011. However, for OEMs and sales terminals, December, traditionally a peak sales season, inevitably becomes crucial not only for presenting impressive year-end reports but also for "hiding" some sales for the uncertain market of the coming year.

There is good news as well. Dong Yang, Secretary-General of the China Association of Automobile Manufacturers (CAAM), believes that with the gradual fading of the collective impact of favorable policies exiting, and next year's macro-policy environment expected to be better than this year's, the auto market next year will surpass this year's performance. Furthermore, most industry insiders widely expect an overall growth target of around 10% for the auto market next year. Looking ahead in the last month of 2011 can indeed boost morale.

The roller-coaster ride of the auto market—annual growth settled, leaving less than 20 days until the end of this year's market "closure," yet from the ups and downs of the first 11 months of this year, we can already accurately gauge the trend of China's domestic auto market this year—severe slowdown in growth, entering a deep adjustment phase.

The lackluster performance during "Golden September and Silver October" has caused significant concern in the industry. There was once a belief that this year's auto market might see a negative growth unseen for many years. However, CAAM finally made an optimistic statement at last Friday's monthly information session, stating that this year's auto market achieving positive growth is already certain. "Next year's auto market will be better than this year's." Compared to this year's downturn in the auto market, CAAM Secretary-General Dong Yang holds an optimistic view of next year's market. November saw a slight recovery in the auto market based on the production and sales data released by CAAM last Friday. The market is still in a downward trend. "Looking at the cumulative data from the first 11 months, the growth rate continues to decline, with production growth at 2%, falling to a new low for the year, and sales growth also falling below 3% for the first time," said Zhu Yiping, Assistant Secretary-General of CAAM.

However, the official cold data does not align with the feelings of dealers large and small in the automotive market. Reporters from "First Financial Daily" learned from dealers in various cities in North China such as Beijing, Qingdao, and Tianjin that under the premise of intensifying price reductions and promotions, November's showroom traffic and terminal sales were significantly better than those in September and October.

"From November to the end of the year, we must seize this opportunity to make a final push, which may be the only way to complete this year's sales targets," said a dealer of a Japanese joint venture brand in Qingdao. Auto dealers this year not only face a severe reduction in favorable policy support but also due to the national "Three Expenditure Rectification" this year, the number of government vehicles purchased with fiscal funds at the end of the year will be greatly reduced, making it unlikely for government vehicles to drive auto sales. Attracting private consumers with more favorable prices has become the most pragmatic marketing strategy. According to the usual practice in previous years, the last two months of the year are the peak periods for price reductions in the auto market. From the current feedback on price reductions from various local markets, promotional efforts have been intensified across all levels of vehicle models. Not only have Japanese and Korean brands and domestic independent brands significantly reduced prices due to high inventory pressure, but many popular models and even luxury cars have increased their discount "sizes," with a certain domestic luxury car brand offering promotions below 80% of the original price.

Manufacturers' assessment methods for dealers are the main reason for dealers' "bloodletting" at the end of the year. According to the general industry practice, at the end of December each year, vehicle manufacturers conduct sales target assessments for dealers. Businesses that achieve their goals receive rewards such as "rebates," while those who do not not only receive no additional rewards but may also fail to obtain lower purchase prices.

Although there is still a slight upward trend at the end of the year, the entire year's auto market remains sluggish.

CAAM data shows that in the passenger car segment from January to November, although MPV and SUV growth exceeded 10%, the crossover market, which has a significant impact on the overall auto market, still declined by about 10%, continuing to drag down the overall trend.

Independent brand car companies still face significant market pressure. According to CAAM statistics, in the first 11 months, the market share of independent brand sedans decreased by 1.50% year-on-year, with their proportion of sedan sales falling to 29.05%. The commercial vehicle sector faced more severe challenges in November, with production and sales in the first 11 months decreasing by 8.68% and 5.93% respectively, expanding from the previous 10-month decline. Truck products continue to slump, while passenger car sales outperform trucks. "Although China's auto production and sales declined year-on-year in November, there is reason for cautious optimism. Against the backdrop of high production and sales at the end of last year, total production and sales for 2011 can still maintain positive growth, likely increasing by about 2% year-on-year," predicted Dong Yang. Dong Yang believes that compared to a 46% increase two years ago and a 34% increase last year, this year's severe slowdown in auto market growth is mainly due to three unfavorable factors: the collective expiration of favorable policies, macro-control policy impacts, and deteriorating automotive usage environments. Automotive exports have become the brightest spot in China's auto market this year. According to CAAM statistics, auto company exports rebounded month-on-month in November, with a year-on-year increase of over 50%. Auto exports in the first 11 months increased by 274,900 vehicles compared to the same period last year, contributing 65.43% to the growth of domestically produced vehicles during the same period, an 11 percentage point increase from the first 10 months. Dong Yang boldly predicts that next year's auto market will be better than this year's due to the diminishing impact of favorable policy exits and an improved macro-policy environment.