Automakers' Battle in China Heats Up
Oct 14th 2013 12:32PM
Updated Oct 14th 2013 12:34PM
Automakers are practically stumbling over themselves to get every percentage of market share in China possible. It's not hard to figure out why: China is already the world's largest automotive market, and it's predicted to grow from an estimated 20 million autos sold this year to as much as 30 million annually by the end of the decade. That projected growth is nearly equal to all of the vehicles sold in Europe last year.
The storylines in the region are just as intriguing. Will General Motors or Volkswagen begin to pull away as the clear sales leader? Will Toyota and Honda rebound from the anti-Japanese sentiment that sent sales plummeting for a full year? Will Ford be able to catch all those global competitors after joining the market so late? Let's take a look at China's September sales and see if there are any clues to help us answer these questions.
China's passenger-vehicle sales surged 21% in September, the segment's best showing since January. That puts China's sales at 15.9 million through the first nine months of 2013, and sales remain on pace to break 20 million vehicles sold for the full year.
Battle for the top spot
The two top foreign brands are in a tight race. Volkswagen posted sales of 2.36 million vehicles in China through September, which narrowly topped General Motors at 2.31 million.
General Motors booked a record September, as sales increased 13.7% to more than 277,000 vehicles sold. General Motors is continuing to see strong demand for its Buick and Cadillac brands, which had increases of 14.3% and 73.9% compared to last year.
While Volkswagen has the slight edge so far this year, I think General Motors might have what it takes to win the top spot as it refreshes, replaces, or redesigns 90% of its vehicle lineup by 2016. That should provide a significant boost in sales across the globe.
It's been a wild ride in the China this year, and September marks one year after protests erupted across China when Japan moved to purchase a group of disputed islands. The situation sent Japanese automakers' sales spiraling downward by nearly 50% for months.
As the anti-Japan sentiment finally eases, Japanese automakers could begin posting pretty absurd monthly increases, especially if last month's sales represent the start of a trend. Honda sold just less than 74,000 units, which is more than double the amount it sold last year. Toyota posted an impressive 63% increase, selling slightly more than 72,000 units.
"Last September was the peak of the anti-Japanese sentiment, so we are coming off a low base," said Harry Chen, a Shenzhen-based analyst at Guotai Junan Securities Co, according to Bloomberg. "The Japanese have improved a lot, but their recovery is still incomplete."
Ford gains ground
During the last year, while Japanese automakers struggled, Ford eagerly jumped in to provide its new vehicles to consumers needing a new option. This was the opportunity Ford needed to get its foot securely in the door of a potentially lucrative region -- and it's taking full advantage of the chance.
Last month, Ford's sales jumped 61% to more than 96,000 units sold. For the first three quarters of the year, its sales are up 51% in China, and it doesn't show any signs of slowing down. Ford also had the best-selling model in China last month, as Ford's Focus remains a huge part of the company's success internationally.
Ford's also seeing strong demand for its SUV and crossover segments as the Kuga (Escape) and EcoSport gain popularity. Ford doesn't plan on letting off the gas and intends to achieve its goal of 6% market share by mid-decade. It also plans to finish 15 new model launches by 2015 as well to further boost market share and sales. Look for Ford's large year-over-year sales increases to continue even as Japanese automakers rebound.
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The article Automakers' Battle in China Heats Up originally appeared on Fool.com.Fool contributor Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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