China Watch : SAIC’s June sales soar, but can’t match earlier gains

Automotive News China/Reuters, 9th July, 2010

SHANGHAI (Reuters) – Shanghai Automotive Industry Corp., partner to General Motors and Volkswagen in China, posted a 30 percent sales gain last month in a cooling market.  

SAIC, China’s largest automaker, reported sales of 289,200 vehicles in June. The increase failed to match SAIC’s 45 percent sales surge in the first three months. 

“It’s not just SAIC that is slowing down – all the other auto makers have seen their growth rate tapering off,” said Huang Zherui, an Analyst with consultancy CSM Worldwide. “It’s just impossible to match last year’s frenetic pace.” 

In January 2009, industry sales in China fell nearly 8 percent as the economy slowed. Demand rose sharply in April 2009 after the government offered sales incentives and introduced a $600 billion economic stimulus plan. 

SAIC President Chen Hong told shareholders last month that management had expected early on that China’s market this year would start strong but slow down gradually. 

It’s not just SAIC that is slowing down – all the other auto makers have seen their growth rate tapering off. It’s just impossible to match last year’s frenetic pace.” Huang Zherui, Analyst, CSM Worldwide

To compensate, the Shanghai-based automaker and its joint ventures – Shanghai-General Motors Co. and Shanghai-Volkswagen AG – have sped up their expansion into smaller cities, which traditionally have been dominated by domestic brands. 

From January to June, SAIC sold nearly 1.8 million vehicles, up 45 percent from the year-earlier period. The company is targeting sales of 3 million units this year. 

A solid first half gives SAIC’s managers “more confidence” to brace for challenges for the rest of the year, Chen said. 

In the first six months, SAIC derived nearly a third of its sales from SAIC-GM-Wuling, which sold 681,200 units, up nearly 30 percent. General Motors is seeking to increase its 34 percent stake in the joint venture. 

SAIC’s other joint ventures – Shanghai GM and Shanghai VW – reported sales increases of 44 percent and 66 percent respectively in the first six months. Sales of SAIC’s own-brand car sales nearly doubled to 40,200 units. 

[Source: Automotive News China]

Clive Goldthorp

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