China Market: Changan Group healthy, but a few midsized automakers insolvent

Market recovers in October 2020 with production up 11.0% and sales up 12.5%

2020/12/18

Summary
Trends of major Chinese manufacturers from July to the end of October
Trends among major foreign-equity automakers from July to the end of October
Major automakers' production and sales volumes in China from January to October 2020 (ex-factory)

Summary

According to a November 11, 2020 announcement by the China Association of Automobile Manufacturers (CAAM), production volume in China in the January to October 2020 period declined 4.6% year-over-year (y/y) to 19.519 million units. Sales volume during the same period was down 4.7% y/y to 19.699 million units.

In addition, according to a preliminary report released by CAAM on December 4, 2020, sales volume for November is forecasted to increase 11.1% y/y to 2.733 million units, and sales volume for the January to November period is forecasted to reach 22.430 million units.

In October, production volume increased 11.0% y/y to 2.552 million units, and sales volume increased 12.5% y/y to 2.573 units; both production and sales showed monthly year-over-year increases for seven consecutive months. Production of New Energy Vehicles (NEVs) increased for the month by 69.7% y/y to 167,000 units and sales were up 104.5% y/y to 160,000 units.

Among the major group companies, the Changan Automobile Group, with strong sales of its own-brand vehicles and joint venture models, posted a y/y increase of more than 10% in sales volume in the January-October period. FAW Group's foreign-equity joint ventures (FAW-VW and FAW-Toyota models), own-brand vehicles, and commercial vehicles all performed well, with sales increasing 7.8% year-on-year to 3.013 million units. By automaker, commercial vehicle manufacturers such as Beiqi Foton Motor, Dongfeng Motor, and the China FAW Group performed well. Among major passenger car manufacturers, sales volume of Chongqing Changan Automobile, Changan Ford, GAC Toyota, FAW Toyota, Beijing Benz, and Brilliance BMW increased by more than 5.0% compared to the same period last year.

Looking at the trends of China's major automakers in the July to October period, Chinese manufacturers, both state-owned and private, invested aggressively throughout the period. In addition, many of them are expanding their manufacturing sites, mainly by building commercial vehicle plants. In the area of electrification, Chinese manufacturers are focusing on building infrastructure, services, and other environmental improvements. On the other hand, some manufacturers, such as the medium-sized manufacturer Lifan Automobile and the emerging EV manufacturer Byton, have fallen into bankruptcy. The Geely Group, through its subsidiary, invested in the bankruptcy restructuring proceedings of Lifan, and has also became the largest shareholder of Hualing Xingma Automobile (Group) Co., Ltd., a truck manufacturer that is in poor financial condition.

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