Chinese OEM exports decline in H1

China's homegrown OEMs exported a total of 486,809 passenger and commercial vehicles in the first six months of 2013, down from 489,849 units exported in the same period of 2012. The sedan segment saw exports of 203,018 units in January–June this year, down from 206,237 units in the first half of 2012. Multi-purpose vehicles (MPVs) saw exports of just 3,587 units in the first half of this year, up from 2,337 exported in the corresponding period of 2012. According to data from the China Association of Automobile Manufacturers (CAAM), exports of two-wheel-drive (2WD) sport utility vehicles (SUVs) reached 39,392 units in the first half of 2013, down from 42,463 units in the first six months of last year. Meanwhile, there was an increase in exports in the four-wheel-drive (4WD) SUV segment to 24,178 units in January–June, compared with 17,573 units in the first half of last year. Total exports of crossover (minibus) vehicles were 24,108 units in the first six months, up from 19,074 units in the same period of 2012. A total of 143,340 trucks were exported in the first half of 2013, down from 154,309 trucks exported in the same period a year ago, while 12,506 truck chassis were exported, up from 9,794 units.

The CAAM's figures show the top exporter of passenger vehicles from China in the first half of this year remained Chery, although the automaker has been seeing sharp decreases in export sales. A total of around 40 automakers exported from China in the passenger vehicle segment in the first half of this year. According to CAAM data, this includes sedans, SUVs, minibuses, and MPVs. However, the CAAM defines vehicle exporters based on their company names, which often means that a company with a subsidiary is listed twice. For example, by combining the export figures for the two General Motors (GM) joint ventures (JVs) – Shanghai General Motors (SGM) and GM-Wuling (SGMW) – the total is 44,641 units, which would give GM a ranking of third place in the exports league table. GM is increasing its drive to raise the volume of its exports from China. GM China chairman Bob Socia has said that the automaker aims to increase exports by 70% this year due to interest in low-cost models. GM confirmed to IHS Automotive that it aims to export 130,000 units from China this year, up from 77,000 exported in 2012. Meanwhile, Nanjing Auto Company (NAC) no longer exists, as the company was taken over by SAIC; however, the CAAM still lists exports under NAC that relate to models produced at plants in Nanjing. Therefore, CAAM data for SAIC and NAC exports need to be added together, giving a total of 3,941 units exported in the first half of the year. According to CAAM data, the models exported under the SGM and GM-Wuling names relate to GM brand models only, while SAIC-owned brands are exported under SAIC and NAC.

Overall, some automakers saw a decline in exports in the first half on a year-on-year (y/y) basis; however, Geely, GM, JAC, and Changan all achieved growth.

Outlook and implications

Chinese automakers are looking to expand their presence in markets outside of China to gain volume sales, following exports of more than 1 million units in 2012 (see China: 18 January 2013: Chinese vehicle exports hit 1 mil. units in 2012). However, although Chinese automakers currently export to a great number of countries, this generally involves low volumes per destination. Such a strategy is not cost-effective, as Jenny Jin of Geely International's logistics department recently confirmed. Speaking at an industry event, Jin said that the aim of every automaker is to export large volumes to reduce costs per unit and increase economies of scale. The current situation differs significantly from this aim as Chinese automakers look to raise their profiles and introduce their products in new markets. They hope that, once this happens, those markets could potentially become volume destinations.

Markets such as those in Africa also offer potential, as disposable incomes are expected to increase and give consumers in the continent's countries access to personal mobility. Chinese automakers hope to be there for these first-time buyers. In addition, the Chinese government has been pushing infrastructure and development projects in Africa and simultaneously has encouraged Chinese automakers to set up distribution networks and assembly plants there (see China: Special Report: 20 June 2012: Can Chinese automakers unlock Africa's potential?). Under plans to develop infrastructure in the region, a number of heavy vehicle sales have also taken place, often with funding from the Chinese government. The China National Heavy Duty Truck Company (CNHTC), for example, recently received a new order for its trucks in Nigeria.

However, it is the markets of Western Europe and North America that most entice Chinese automakers, due to the high rates of vehicles per 1,000 people. These indicate that families in these markets often own more than a single vehicle, and often a single member owns more than one personal mobility vehicle. Chinese automakers, therefore, believe that if they entered these markets, they would achieve faster volume sales growth. In 2012, because of hikes in import tariffs, Chinese automakers' shipments to Brazil declined (see Brazil: 25 January 2013: Chinese exports to Brazil decrease in 2012). The 30% tariff can be avoided if automakers have a high local content rate of over 60%. Brazil previously had a 35% import tariff (30% import tariff plus other taxes) on vehicles not built in Brazil, with a requirement for 60% of the vehicle to be composed of parts from Brazil in place in 2012. This has now been changed to a 70% local content requirement for vehicles sold in Brazil, as of 1 January 2013. Chinese automakers Chery, JAC, Lifan, and Geely are all planning to open plants in Brazil to avoid the high import tariffs and raise sales in the local market. Meanwhile, markets such as Iran and Iraq remain on the list of top export destinations for Chinese-made vehicles as these markets are subject to international trade restrictions, preventing many international automakers' participation. In contrast, Chinese automakers are not limited or obliged to follow many of the treaties barring trade to such countries, allowing them to achieve higher volume sales in these markets. This is a key advantage but one that could change in the future.

This article is a summary of an IHS Automotive Special Report on Chinese OEMs' vehicle exports (see China: Special Report: 1 August 2013: Chinese vehicle exports: A look at destinations).