In the first quarter, GM's sales in China rose marginally by 2.4%, while Ford achieved a growth rate of 9%.
IHS Automotive perspective | |
Significance | While GM and its JVs volume sales is higher than that witnessed by fellow American automaker Ford, the Buick brand is under attack from the Ford brand. |
Implications | Automakers Ford and GM are witnessing a slowdown in growth rates in China as the market cools. |
Outlook | IHS Automotive forecasts that in 2015 the Buick brand's sales in China will be surpassed by the Ford brand. |
General Motors (GM) and its joint ventures (JVs) in China sold a combined total of 338,350 units in the country in March, marking an annual increase of 8% year on year (y/y), the automaker says in a statement sent to IHS Automotive.
However, in the first quarter, GM and its JVs in China sold a total of 944,181 units, up from the 919,114 units sold in the same period last year (see China: 7 April 2014: GM sales increase 7.8%, setting record for March and Q1), an increase of 2.72% y/y.
The brands sold under GM and its JVs in China include Wuling and Baojun produced by the SAIC-GM-Wuling joint venture, as well as GM core brands Buick, Chevrolet, and Cadillac.
The Wuling brand's sales across China decreased 0.7% from March 2014 to 158,628 units in March 2015 due to continued weakness in the mini-commercial vehicle segment. In the first quarter, the Wuling brand sold a total of 485,758 units, up from the 480,011 units sold in the same period last year. According to GM, the Wuling brand is migrating from mini-commercial vehicles to multipurpose vehicles (MPVs).
Buick sales in the Chinese market decreased 0.2 % y/y in March to 78,659 units. In January, Buick sold a total of 90,508 units, in February the brand witnessed sales in China of 59,088 units, while in March sales reached 78,659 units, giving GM total first-quarter sales of 228,255 units. In the same period of 2014, the brand sold a total of 238,094 units; therefore, GM's core Buick brand's sales were down 4.13% y/y.
Chevrolet's sales in China increased 3.1 % on an annual basis to 57,751 units. In the first month of the year, Chevrolet sold 64,490 units, while in February the brand sold 47,521 units. In the first-quarter period, the brand's sales in China were 160,762 units, while in the same period last year the brand sold 168,371 units; consequently, Chevrolet's sales were down by 4.5% y/y.
Baojun's sales in March jumped 599.8 % y/y to 33,659 units. Meanwhile, Cadillac's sales in China came in at 9,197 units, up by 75.6 % y/y.
Ford continues to play catch-up in China and the automaker's sales in the first quarter were up by 9% y/y to 296,825 units, the company says in a statement sent directly to IHS Automotive. Ford and its JVs have sold a total 104,842 units in March, marking an increase of 1% y/y, the automaker says, from 103,815 units sold in the same month last year.
Ford's passenger-car JV, Changan Ford Automobile (CAF), sold 218,487 vehicles in the first quarter, up 12% y/y from 195,198 sold during the same period last year. the automaker's monthly sales reached 74,418 vehicles, up 4% from 71,888 units sold during the same period last year.
Ford's other investment in China, Jiangling Motors Corporation (JMC), sold 70,582 vehicles in the first quarter, up 5% from 67,125 units sold in the same period last year. Sales in March reached 27,002 vehicles compared with 28,501 units in March 2014.
Outlook and implications
Although GM's sales in China were up, they were up by a low growth rate of just 2.44%. This is significant as GM is now seeing slow sales growth in China as the market witnesses an overall cooling-down period. For comparison, in the same period last year, GM and its JV sales in China rose by double digits, increasing 12.6% y/y. In 2013, the automaker witnessed an increase in quarterly sales of 9.6% y/y (see China: 3 April 2013: GM China sales up 9.6% Y/Y in Q1).
Meanwhile, fellow US automaker Ford witnessed a sales increase of 9% y/y in China in the first quarter, and for Ford too the growth rates are poor in comparison with previous years. In the first quarter of 2014, for example, Ford's sales rose by 45% y/y (see China: 9 April 2014: Ford Q1 sales up 45% y/y in China, pushes Lincoln, Ford brands for future Chinese growth), while in the same period in 2013 Ford's sale jumped by 54% (see China: 10 April 2013: Ford's Chinese sales surge 54% y/y in Q1).
The slowing growth rates are being felt across the market, with international brands that witnessed double-digit sales growth in previous years now witnessing single-digit growth - but domestic brands that witnessed low and sometimes negative growth in previous periods are now witnessing higher growth rates.
Ford is aiming to counter its slowing sales growth rate by introducing the new Ford Taurus, which is a new flagship sedan from the CAF joint venture. The car will be released at the upcoming Shanghai Motor Show (see China: 1 April 2015: Shanghai Auto Show 2015: Ford pushes model line-up for Chinese buyers). Meanwhile Ford is also expanding capacity in China with a new plat takeover with its JV partner Changan (see China: 26 March 2015: Changan Ford takes over Hafei Auto).
IHS Automotive forecast data show that the Buick brand will be beaten in 2015 by the Ford brand in China. We currently forecast that Buick will witness annual sales in China of around 988,975 units this year, while Ford will achieve 996,348 units, with the trend continuing in the coming years as the Ford brand gains volume in China. Meanwhile, Chevrolet is forecast to witness sales of over 714,000 units this year in China, rising to over 810,000 units in the country by 2020.