The Chinese market in 2016: Passenger vehicle tax break contributes to record high sales

SUVs comprise 37% of the passenger vehicle market, Chinese brands expand market share

2017/02/20

Summary

Chinese car sales (Source: Created from CAAM announcement and the MarkLines database)

  In 2016, new vehicle sales in the Chinese market reached an all-time high of 28.03 million vehicles (based on factory shipments, including exports), exceeding the China Association of Automobile Manufacturers' (hereafter referred to as CAAM) initial sales forecasts of 26.04 million vehicles with a year-over-year (y/y) increase of 13.9%.

  The reason for this growth can be attributed to the tax break for passenger vehicles with an engine displacement of 1.6 liters or lower that started in October 2015. In December, the original tax break ended, which created a last minute rush in demand, and these vehicles accounted for 74% of passenger vehicle sales with 1.98 million vehicles. Additionally, throughout 2016, roughly 70% of all passenger vehicle sold, a total of 17.607 million vehicles, had an engine displacement of 1.6 liters or lower.

  As for vehicle sales per group, the top five companies (SAIC, Dongfeng Motor, FAW, Changan Automobile, BAIC) continued to dominate. The automakers saw y/y growth of 10.7% to roughly 19.714 million vehicles, accounting for approximately 70% of the market as a whole.

  By vehicle type, sales of SUV models, which are popular in China, grew 45% y/y and exceeded 9 million vehicles. SUVs accounted for 37% of the passenger vehicle market, with 57% coming from Chinese brands. At the same time, the market share of sedans and hatchbacks shrank from 55% in the previous year to 50% with sales of over 12 million vehicles.

  With regards to the market share of passenger vehicles from Chinese/foreign brands, Chinese OEMs, which actively released SUV models, lead by 43% with sales of over 10 million vehicles. Although many foreign brands increased vehicle sales, their market shares also decreased slightly. In particular, the French OEM PSA not only saw its market share decrease, but its vehicle sales also fell by roughly 16%. The VW Group's vehicle sales declined in 2015, but recovered in 2016 with a 12.1% y/y increase to 3.87 million vehicles.

  Vehicle exports in 2016 continued to decline, continuing to fall from the previous year to 708,000 vehicles. At the same time, passenger vehicle exports saw a y/y increase of 11.5% to 477,000 vehicles. Vehicle imports saw a y/y decline by 3.3% between January and November to 958,000 vehicles.

  Thanks to government subsidies, sales of new energy vehicles (NEVs), including vehicles like EVs and PHVs, grew to 507,000 vehicles, or roughly 150% in comparison to the previous year. Roughly 332 thousand units of passenger NEVs were sold. BYD continues to be the market leader with its vehicles accounting for roughly 30% of NEV sales.

  The Chinese Association of Automobile Manufacturers (CAAM) set its vehicle sales forecast for China in 2017 at roughly 29.4 million vehicles, and projects that Chinese OEMs will strengthen their branding, leading to even more intense competition. The next report on China will cover the 2017 vehicle sales forecasts of automakers.


Related Reports:

Sales in China rise 8.0% to 12.81 million units in first half of 2016 due to tax breaks (Aug. 2016)
Chinese OEM plans for 2016: Tax break pushing growth to 6% (Mar. 2016)