(BEIJING) Zhao Hang, who helped devise China’s auto-stimulus package, is in demand from car buyers battling an unexpected consequence: two-month waiting lists.
‘Eight friends have asked me to make calls or write notes to contacts to help speed up purchases,’ Mr. Zhao, president of the government-linked China Automotive Technology & Research Centre, said in a recent interview. ‘Given the world economic situation, demand for cars is surprisingly strong in China.’
Beijing drivers, used to leaving showrooms with new cars the same day, now have to wait about three weeks for a Hyundai Motor Co Yuedong Elantra, China’s bestselling car, or as long as eight months for a Honda Motor Co CRV sport-utility vehicle (SUV).
Carmakers failed to predict a 14 per cent sales jump caused by an economic rebound, tax cuts and subsidies, and are now trying to raise Chinese output even as they cut US and European production on plunging sales.
‘We are having headaches and shortages because the automaker can’t make enough Yuedongs,’ said Li Minghui, a salesman at dealership Beijing Hyundai Boshishan. ‘We expected sales to pick up at the beginning of this year, but it’s beyond our imagination that it would be this good.’
The China Association of Automobile Manufacturers in January forecast a 5 per cent increase in 2009 auto sales after demand declined in four of the last five months of 2008 amid the global recession. That would have been the slowest pace in 11 years.
General Motors Corp (GM), the largest overseas automaker in China, made a similar prediction.
Instead, auto sales have surged after the government offered subsidies to drivers in rural areas and cut retail taxes as part of a wider 4 trillion yuan (S$855 billion) economic stimulus plan. The demand jump has caused GM to double its 2009 industrywide growth forecast. Combined with a 37 per cent slump in US auto sales because of the recession, the surge has made China the world’s largest auto market so far this year.
‘Customers have to book in advance because there’s not enough stock of the bestselling cars,’ said Guo Yong, information manager at Beijing Asia Games Village Automobile Exchange, which houses dealerships accounting for about 10 per cent of Chinese car sales. ‘Fourth-quarter sales weren’t that good last year and most carmakers curbed production as they were pessimistic about sales this year.’
Industrywide production trailed domestic and export sales by about 300,000 vehicles in the six months ended May, according to the China Passenger Car Association. That has helped push new vehicle stockpiles to near two-year lows.
To increase supplies of Yuedongs and other models, Beijing Hyundai Motor Co, Hyundai Motor Co’s main China venture, ran plants at near-full capacity last month. Inventories had dropped to 80 per cent of monthly sales, said president Noh Jae Man.
Volkswagen has also added 50,000 vehicles to its 2009 production plan because of the demand jump.
‘The development of the passenger-car market in the first quarter exceeded our expectations,’ said Winfried Vahland, Volkswagen’s China head.
Honda’s two ventures in China have been running with three shifts because of demand for models including City cars and CRVs, the bestselling SUV in China. Still, the company hasn’t yet decided to expand capacity on concerns that demand may not be sustainable, said Zhu Linjie, a Beijing-based Honda spokesman.
The tax cuts and subsidies may have caused a short-term sales surge that will fade over the coming months, said Ricon Xia, a Daiwa Institute of Research (HK) analyst in Shanghai. Both stimulus measures are due to expire at the end of the year.
‘It is not yet clear as to how demand will go in the second half,’ Mr. Xia said.
The biggest logjam for Chinese automakers seeking to raise production is a shortage of parts, particularly more complex components, such as automatic gearboxes, generally imported from overseas. These are in short supply as plunging auto sales in the US, Europe and Japan, coupled with the collapse of GM, has forced parts makers into bankruptcy.
‘Component makers going out of business is causing headaches for carmakers in China,’ said Qin Xuwen, a senior analyst at Orient Securities Co in Shanghai. ‘It will take a couple of months to fix this.’
To safeguard future supplies, Chinese companies are buying overseas parts makers. BeijingWest Industries Co in March agreed to acquire the remaining global suspension and brake businesses of Delphi Corp, the bankrupt former GM parts units. The same month, Geely Holding Group Co, China’s biggest private automaker, agreed to buy Drivetrain Systems International, an Australian gearbox-maker that was in receivership.
Such deals may help boost Chinese vehicles supplies in the long run. For now though, drivers may have to continue waiting.
‘People are lining up for cars, and vehicles are going out of stock,’ Mr. Zhao said. ‘Who could have expected that last year?’ - Bloomberg
2 comments:
In China, too many buyers chasing too few cars
Tax cuts and subsidies help fuel waiting lists
(BEIJING) Zhao Hang, who helped devise China’s auto-stimulus package, is in demand from car buyers battling an unexpected consequence: two-month waiting lists.
‘Eight friends have asked me to make calls or write notes to contacts to help speed up purchases,’ Mr. Zhao, president of the government-linked China Automotive Technology & Research Centre, said in a recent interview. ‘Given the world economic situation, demand for cars is surprisingly strong in China.’
Beijing drivers, used to leaving showrooms with new cars the same day, now have to wait about three weeks for a Hyundai Motor Co Yuedong Elantra, China’s bestselling car, or as long as eight months for a Honda Motor Co CRV sport-utility vehicle (SUV).
Carmakers failed to predict a 14 per cent sales jump caused by an economic rebound, tax cuts and subsidies, and are now trying to raise Chinese output even as they cut US and European production on plunging sales.
‘We are having headaches and shortages because the automaker can’t make enough Yuedongs,’ said Li Minghui, a salesman at dealership Beijing Hyundai Boshishan. ‘We expected sales to pick up at the beginning of this year, but it’s beyond our imagination that it would be this good.’
The China Association of Automobile Manufacturers in January forecast a 5 per cent increase in 2009 auto sales after demand declined in four of the last five months of 2008 amid the global recession. That would have been the slowest pace in 11 years.
General Motors Corp (GM), the largest overseas automaker in China, made a similar prediction.
Instead, auto sales have surged after the government offered subsidies to drivers in rural areas and cut retail taxes as part of a wider 4 trillion yuan (S$855 billion) economic stimulus plan. The demand jump has caused GM to double its 2009 industrywide growth forecast. Combined with a 37 per cent slump in US auto sales because of the recession, the surge has made China the world’s largest auto market so far this year.
‘Customers have to book in advance because there’s not enough stock of the bestselling cars,’ said Guo Yong, information manager at Beijing Asia Games Village Automobile Exchange, which houses dealerships accounting for about 10 per cent of Chinese car sales. ‘Fourth-quarter sales weren’t that good last year and most carmakers curbed production as they were pessimistic about sales this year.’
Industrywide production trailed domestic and export sales by about 300,000 vehicles in the six months ended May, according to the China Passenger Car Association. That has helped push new vehicle stockpiles to near two-year lows.
To increase supplies of Yuedongs and other models, Beijing Hyundai Motor Co, Hyundai Motor Co’s main China venture, ran plants at near-full capacity last month. Inventories had dropped to 80 per cent of monthly sales, said president Noh Jae Man.
Volkswagen has also added 50,000 vehicles to its 2009 production plan because of the demand jump.
‘The development of the passenger-car market in the first quarter exceeded our expectations,’ said Winfried Vahland, Volkswagen’s China head.
Honda’s two ventures in China have been running with three shifts because of demand for models including City cars and CRVs, the bestselling SUV in China. Still, the company hasn’t yet decided to expand capacity on concerns that demand may not be sustainable, said Zhu Linjie, a Beijing-based Honda spokesman.
The tax cuts and subsidies may have caused a short-term sales surge that will fade over the coming months, said Ricon Xia, a Daiwa Institute of Research (HK) analyst in Shanghai. Both stimulus measures are due to expire at the end of the year.
‘It is not yet clear as to how demand will go in the second half,’ Mr. Xia said.
The biggest logjam for Chinese automakers seeking to raise production is a shortage of parts, particularly more complex components, such as automatic gearboxes, generally imported from overseas. These are in short supply as plunging auto sales in the US, Europe and Japan, coupled with the collapse of GM, has forced parts makers into bankruptcy.
‘Component makers going out of business is causing headaches for carmakers in China,’ said Qin Xuwen, a senior analyst at Orient Securities Co in Shanghai. ‘It will take a couple of months to fix this.’
To safeguard future supplies, Chinese companies are buying overseas parts makers. BeijingWest Industries Co in March agreed to acquire the remaining global suspension and brake businesses of Delphi Corp, the bankrupt former GM parts units. The same month, Geely Holding Group Co, China’s biggest private automaker, agreed to buy Drivetrain Systems International, an Australian gearbox-maker that was in receivership.
Such deals may help boost Chinese vehicles supplies in the long run. For now though, drivers may have to continue waiting.
‘People are lining up for cars, and vehicles are going out of stock,’ Mr. Zhao said. ‘Who could have expected that last year?’ - Bloomberg
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