China’s November car sales hit a one-month record. Total cars and light vehicles shipped to dealers reached 1.34 million, up 29% from the same month last year. Sales for the first eleven months of the year were 12.45 million, up 35%.
Several analysts said the increase was due to incentives the government has given car buyers. These could go away next year. “Consumers who expect the stimulus policies to be discontinued next year are bringing forward purchases before time runs out,” Yu Bing, an auto analyst at Pingan Securities told Bloomberg. “There is little reason to support the extension of the tax rebate and vehicle trade-in policies, given robust industry growth.”
The news is good for GM (NYSE: GM), Ford (NYSE: F) and several other automotive manufacturers who have seen their fortunes drop in Europe and the US. VW will be helped more than most companies by the increased sales. It is the largest car company in China based on sales volume, along with its joint venture partners, about tied with GM for total annual units shipped.
US domestic car sales, although they have rebounded, will still only reach about 12 million this year. That is against a level of over 16 million in 2005 and 2006. China’s number is likely to be closer to 14 million for 2010.
The news from China highlights the payoff that foreign car companies which were early moving into the People’s Republic are reaping now. GM has had a presence on the Mainland for decades. Ford was much slower to move into China. Chrysler has almost no presence there at all. Investors still look as Ford as a proxy for the US and Europe car markets. The No.2 American car company may be more successful than most of its rivals in the US, while GM is a much better proxy for the success of American vehicle manufacturers in China.
GM stressed it position in China as one of the benefits of participation in its IPO. China car giant SAIC even put money into the offering. GM will continue to enjoy Wall St’s favorable view that its fortunes will be fed by its Chinese sales. That is until a loss of government incentives or a slowing of the economy makes it look more like the US market.
Douglas A. McIntyre
Get Ready To Retire (Sponsored)
Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Get started right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
