Chinese car sales on the John Batchelor radio show

Chinese car sales on the John Batchelor radio show

Lou Ann Hammond, CEO, www.drivingthenation.com, talked to John Batchelor, host of the John Batchelor radio show and Gordon Chang, Forbes, about Chinese car sales, Japan in China and which car companies are thriving.

In September, 2012, Hammond wrote in www.drivingthenation.com, “Chinese Automotive Monthly acknowledges that, “The Diaoyu island dispute between China and Japan, caused by the “nationalization” of Diaoyu Island (editor’s note: known as Senkaku islands in Japan), is becoming more and more disturbing.” Chinese Automotive Monthly goes on to say, “The real reason for the drop in market share of Japanese cars in China is decreasing competitive ability coupled with slow strategy adjustment. With the introduction of a large number of high-tech Volkswagen vehicles in China, Japanese compact and mid-sized cars are being attacked by German or even Korean cars.”

Six months later, Japanese car sales are starting to rebound but have not gained full momentum. Subarus sales, before September 2012, averaged 4,000 a month. After August, 2012, it’s sales fell below the average of 2,000 a month for September, October and November. Car sales for 2012 decreased 24% from Subarus sales in China for 2011.

Subaru has been observing some recovery as of December, 2012. Every month, except February, which includes Chinese New Year, sales have rebounded to 4,000 a month. Subaru has not announced a new joint venture and is still not producing in China, so we are able to compare apples to apples, before and after the island dispute.

Bloomberg’s Businessweek.com put it best in their November 18, 2012 article, “While it’s Japanese peers idled factories in China last month as deliveries slumped, Fuji Heavy was able to ship more cars to the U.S. and Japan, where waiting times have stretched to six months for it’s $25,495 BRZ sports car and two months for the $17,895 Impreza hatchback. The demand helped the Tokyo-based carmaker boost it’s full-year profit forecast by 40% even as Honda and Nissan cut theirs by a fifth.”

Masashi Uemura, Deputy General Manager, Corporate Communications Department, Investor Relations, Fuji Heavy Industries, Ltd., is still hesitant, “We have been observing some recovery from this January. Howe’ver we are still monitoring carefully the sales situation in China, since we understand our sales momentum has not yet fully recovered. The sales drop in February was due to Chinese New Year holidays and on plan. Our annual sales plan in China for CY2013 is about 58,000 unit’s.”

A gain of more than 30% over 2012 would seem good at first blush, but Subaru is projecting about the same sales rates as calendar year 2011. In a market where analysts are predicting a 7% growth and China Automotive Monthly predicts 9.9%, this means that Subaru is losing ground.

Reuters reported that, “Earlier this week, Nissan Motor Co <7201.T> said it’s sales were down 15.1% year-on-year in the three months to March, while Toyota Motor Corp’s <7203.T> fell 12.7% and Honda Motor Co’s <7267.T> decreased 5.2%.”

Volkswagen and Ford seem to be the companies taking advantage of the diplomatic issues that have caused the decline in Japanese car sales in China. According to bestsellingcarsblog.com, there are six Volkswagens in the top ten selling cars for January and February, 2013 and Ford Focus is the number two selling vehicle in China. Data for March is not yet available.

From a press release on Ford’s website, “Sales of the compact Focus totaled 1,020,410 cars worldwide according to the automotive data and trends forecasting leader. Market gains for Focus were driven by consumer demand in China and the United States. China registrations were up 51% last year, with the market responsible for just more than one out of four Focus vehicles sold globally, according to Polk vehicle registration data. U.S. Focus sales were up 40% in 2012, also contributing to the cars global growth.”

Europe is still in a freefall, America is coming back, but China is the biggest market right now that is profitable.

About the Author:

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a member of the North American Car and Truck of the Year (NACTOY), Women's World Car of the Year (WWCOTY), and the Concept Car of the Year.