Consumers in China drive domestic-brand car sales to the detriment of JVs
Sales of domestic-brand sedans and SUVs rose in 3Q 2018 year-to-year, while those of joint-venture (JV) premium brands fell by the same percentage. Domestic-brand dealers generally reported flat levels of discounts/promotions vs. last year, while JV premium–brand dealers cited higher levels of discounts/promotions.
Interviews with sources at automobile dealerships in China revealed that, on average, sedan sales are up 6% for domestic brands, while they are down 6% for JV premium brands in 3Q 2018 vs. 3Q 2017; SUV sales are up 7% for domestic brands, while they are down 10% for JV premium brands. Sales generally were in line with expectations for domestic-brand dealer sources, while they were below for JV premium-brand dealers. Looking ahead, almost all domestic-brand dealers expect overall automobile sales to increase in 4Q 2018 vs. 4Q 2017, while two-thirds of JV premium-brand dealers expect sales to decrease.
Chinese automobile sales trend expectations by segment
Source: Grassroots® Research
Regarding average current inventory, it is 64 days for domestic-brand dealer sources and 50 days for JV premium-brand dealers. Looking ahead, through the rest of 2018, slightly more than half of domestic-brand dealers expect inventory to remain flat, while slightly less than half expect it to decrease; three-fifths of JV premium-brand dealers expect inventory to remain flat, while one-third expect it to increase.
Meanwhile, the current level of discounts/promotions is flat vs. the same time last year for slightly less than three-fourths of domestic-brand dealer sources, with slightly more than half reporting that it is driven by car dealers and slightly more than one-third reporting that it is driven by automakers. Among JV premium–brand dealer sources, the current level of discounts/promotions is up for slightly less than three-fourths, with slightly more than two-thirds reporting that it is driven by car dealers. As to current auto finance penetration, it reportedly is an average 52% for domestic brands and 26% for JV premium-brands. Looking ahead, slightly more than three-fourths of sources expect auto finance penetration to increase in the next 12 months.
Grassroots® Research is a division of Allianz Global Investors that commissions investigative market research for asset-management professionals. Research data used to generate Grassroots® Research reports are received from independent, third-party contractors who supply research that, as far as permissible by applicable laws and regulations, may be paid for by commissions generated by trades executed on behalf of clients.
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