Manufacturing News

China's vehicle sales rose 13% in April, rebounding from sluggish first quarter

China's passenger-vehicle sales rose more than analysts estimated for a second straight month, as Toyota Motor Corp. led a rebound by Japanese automakers from disruptions caused by the March earthquake last year.

Deliveries, including multipurpose and SUVs, rose 13 percent to 1.3 million units in April, the China Association of Automobile Manufacturers said in a statement. Sales were forecast to increase 11.3 percent, according to the average estimate of eight analysts surveyed by Bloomberg News.

Deputy Secretary General Yao Jie said the association sees "signs of recovery" for sales in the world's largest automotive market after they began the year with their worst two-month start since 2005. Toyota, Nissan Motor Co. and Honda Motor Co., which cut output at their Chinese factories after last year's natural disaster in Japan disrupted the supply of
components, led gains as they restored production.

"Japanese carmakers were hit badly by the earthquake last year and that affected overall industry sales," said Chen Liang, a Shanghai-based analyst at Huatai United Securities Co. "This comparison with a lower base helped sales register strong growth."

Total vehicle deliveries in April, including commercial vehicles, rose 5.2 percent to 1.6 million units, the industry association said. Sales of SUVs jumped 34 percent, sedan sales rose 13 percent, while minivan sales fell 0.3 percent.

Passenger-vehicle sales rose 1.9 percent in the first four months of the year, CAAM said.

Forecast unchanged
The association kept its forecast for total vehicle sales to increase 8 percent this year. The slump in demand during the first two months of the year led Gu Xianghua, a deputy to the secretary general at CAAM, to say on March 20 growth may not even reach 5 percent in 2012.

Auto demand rose 32 percent in 2010 after the government introduced subsidies and rebates to encourage buying, before slowing to 2.5 percent last year after the incentives lapsed.

General Motors, China's largest foreign automaker, reported this week that sales in country climbed 12 percent to 227,217 units, as demand for its Wuling minivans offset a drop in Chevrolet deliveries. The Buick Excelle was the top-selling model passenger vehicle model in China last month with 23,200 in deliveries, according to CAAM data.

Ford Motor Co.'s vehicle sales in China rose 24 percent to 54,881 units, the company said in an e-mailed release.

Among Japanese carmakers, Honda Motor Co. sold 43 percent more vehicles than a year earlier, Nissan Motor Co. boosted deliveries 18 percent, while Toyota increased sales by 68 percent.

"This time last year, the earthquake in Japan disrupted a large chunk of our production, comparison with the low base last year is the main reason for April's big growth increase," Niu Yu, the company's Beijing-based spokesman, said May 8.

Hyundai Motor Co.'s Verna and Elantra Yuedong were the only models by Asian carmakers to rank in the top 10 list last month, data from CAAM show.

Most luxury-car manufacturers continued to increase sales at a faster pace than mass-market carmakers.

BMW AG, which introduced the new generation long-wheelbase BMW 3-series sedan last month at the Beijing Auto show, saw sales rise 31 percent last month.

Volkswagen AG's Audi delivered 44 percent more cars in the same period. Daimler AG's Mercedes-Benz bucked the trend, registering a 8 percent decline in monthly sales.

China cut gasoline and diesel prices Tuesday as much as 3.5 percent.

Fuel Prices
Lower fuel costs will help encourage car purchases in the second quarter, Jeff Chung, Hong Kong-based analyst at Daiwa Securities Group Inc., wrote in a note on May 7.

On March 20, gasoline prices were raised up to 7.8 percent for diesel, the biggest jump in more than two years, according to data compiled by Bloomberg.

Cheaper gasoline may reduce vehicle stockpiles in China. Industry inventories reached a 70-day supply during the first quarter, compared with 60 days a year earlier, Soh Weiming, executive vice president at Volkswagen China, said April 22. Stockpiles may rise to an 80-day supply by the middle of the year, he said.

Rising stockpiles will pressure dealerships to step up price cuts, according to Citic Securities Co. and CSC International Holdings.

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