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The forecasted target in 2005 is hard to achieve
In 2005, the National Information Center predicted that China’s auto market would see sales of between 5.82 and 5.85 million vehicles, with the country expected to surpass Japan and become the world’s second-largest automobile consumer. However, by November, it became clear that this target was unlikely to be met. Analysts now estimate that annual sales would reach around 5.6 million units. If Japan manages to hit its own target of 5.6 to 5.7 million, China could indeed claim the second spot globally.
Looking at the performance in November alone, the Chinese auto market showed a sharp upward trend. Production reached 525,800 units, while sales hit 549,600, both rising significantly from the previous month—by 26.28% and 21.60%, respectively. Year-on-year growth was even more impressive: 20.56% for production and 21.64% for sales. Passenger car production and sales rose sharply as well, reaching 371,000 and 393,600 units, up 24.08% and 23.04% from the previous month, and 30.73% and 33.48% year-on-year. Commercial vehicle production and sales were 154,800 and 156,600 units, with production increasing by 31.88% and sales by 18.11% month-on-month, though sales dipped slightly by 0.61% year-on-year.
From January to November, total auto production and sales reached 5,144,700 and 5,137,600 units, up 10.24% and 12.07% compared to the same period last year. Passenger car production and sales totaled 3.5229 million and 3.5153 million, growing by 16.40% and 19.48% year-on-year. In contrast, commercial vehicle production and sales declined slightly, down 1.14% and 1.21% respectively.
Major automakers like FAW, SAIC, Dongfeng, Changan, and BAIC continued to grow steadily in November. FAW, SAIC, and Changan saw significant monthly increases, with sales of 103,500, 96,900, and 64,600 units, respectively. Their sales rose by 32.67%, 35.33%, and 38.17% from the previous month, with year-on-year gains of 1.13%, 41.52%, and 53.44%. Together, these five companies sold 377,700 units in November, accounting for 68.90% of total auto sales.
From January to November, the top ten automakers included FAW, SAIC, Dongfeng, Changan, BAIC, GAC, Hafei, Chery, JAC, and Geely. Their combined sales reached 4,304,800 units, making up 83.79% of the total. Most of them saw stable growth, with only FAW experiencing a slight decline.
Profit has become a major concern for the auto industry this year. After a period of rapid growth, the market is now facing challenges such as declining prices and reduced margins. While price drops are normal, the overall decline in car prices this year has been significant, especially near the end of the year when many models saw large discounts. Although manufacturers haven’t suffered huge losses, dealers have started to operate at a loss to maintain sales.
Fuel tax and auto consumption tax are expected to be key external factors affecting the market in 2006. These policies could lead to higher fuel prices, which may impact consumer behavior. As a result, auto companies must carefully consider their 2006 sales targets, taking into account these upcoming changes.
Despite the challenges, the Chinese auto market maintained steady growth in 2005, with an estimated annual sales volume of 5.6 million units, up about 10% from the previous year. While commercial vehicle sales faced negative growth due to policy factors, passenger car sales remained strong. The competition in the sedan market has led to fierce price wars, often at the expense of profits. Meanwhile, B-class and higher cars remain profitable, but many companies are avoiding price cuts to protect their margins.
As the year draws to a close, automakers are setting goals for 2006. Lessons from the oversupply of 2004 have made companies more cautious in their planning. While analysts predict 10-15% growth in 2006, the actual performance will depend on various factors, including new taxes and changing consumer preferences.