China minibus market expects sales boom in '09

Output and sales made a good start in the first two months. China produced 245,350 minibuses and sold 263,251 units in January-February, up 33.4 percent and 30.83 percent year on year, respectively.

Minibus was the first to step out of shadows in 2008 with the annual output and sales both exceeding one million units. The upward trend continued in January with output and sales growth topping ten percent amid growing demand in urban and rural areas.

-- Minibus industry enjoys government supportive policies

The central government has launched a package of policies in favor of the development of auto market in recent months.

It launched a fuel tax reform in January, canceling six types of fees on road and waterway maintenance and management and raising tax on product oil at the same time.

The State Council approved a stimulus package to boost auto industry on January 14, deciding to temporarily cut purchase tax on 1.6L-or-below passenger vehicles by half to five percent.

The National Development and Reform Commission (NDRC), the country's top economic planner, started to cut gasoline and diesel prices by 140 yuan and 160 yuan/ton on January 15.

The Ministry of Finance and six other ministries have jointly released an implementation plan for auto and vehicle promotion sales in rural areas, deciding to provide 10-percent or 13-percent subsidies to certain vehicle purchases, with minibus sector one of the biggest beneficiaries of the plan.

At the same time, minibus sector also benefits from the four-trillion-yuan stimulus package scheduled to boost domestic demand.

-- Features of Chinese minibus market in Jan.-Feb.

China's minibus market showed signs of monopolization by two automakers, SAIC-GM-Wuling Automobile and Chongqing-based ChangAn Auto, which together snatched a lion's share of 82.24 percent. Their sales growth hit 23 percent, much higher than the average 14-percent growth of the whole sector. The two became two main forces driving up minibus sales in 2009, while other once-popular brands including Hafei, Changhe and FAW Jiabao were heading towards recession.

At the same time, minibus makers started to shift their attention of sales to small and medium-sized cities and the vast countryside, where the majority of its 1.3 billion people live.

The key to succeed in selling minibuses in 2009 includes right selection of products, targeted customers and marketplace.

-- Major players aiming high in 2009

SAIC-GM-Wuling pledges to produce 750,000 vehicles and 420,000 engines this year, with mini commercial vehicles accounting for a 50-percent market share in China.

It plans to produce 203,000 complete vehicles in the first quarter. Included will be 151,000 units from its Liuzhou plant and 52,000 units from Qingdao plant. SAIC-GM-Wuling now has 845 sales outlets and 934 service outlets across country, and will extend its sales channels to rural areas.

ChangAn Auto is aimed at selling 500,000 units this year with the focus on minibus production and sales in rural areas, according to ChangAn's chairman Xu Liuping.

Following government policies to boost auto industry, ChangAn launched a subsidy program, providing 5,000 yuan at most to purchase its minibus models including ChangAn Star S460 and ChangAn Star 2.

It has concluded a cooperative agreement with six motorcycle enterprises, deciding to provide 20,000 minibuses and 30,000 minivans to help promoting sales of six million motorcycles in the countryside.

Jiangxi Changhe Automobile has set a goal of selling 138,000 vehicles in 2009. Included are 81,800 cars, 41,200 minibuses and 15,000 minivans.

The automaker sold 101,338 vehicles in 2008, up three percent on year. Hafei Automobile Group announced a sales goal of 240,000 units for the year of 2009, up over 20 percent on year.

Hafei will focus on the development of low-cost mini vehicles, wide-bodied minibuses, economy cars, alternative-energy vehicles and hybrid vehicles.

Encouraged by the government's supportive policies and low raw material prices, more and more carmakers, including Chery Auto, FAW Haima Automobile and Lifan Motors have vowed to join in the minibus competition.

China's minibus sector will see a sales boom in 2009 thanks to the strong state support, better market environment and the participation of more carmakers in the business.