Car companies take caution in anticipation of slow 2011 sales

Shanghai January 13 (Gasgoo.com) With 2011 already upon us, there is an ever-increasing risk of automobile sales tapering off. Despite the boom season at the end of last year, seeing long lines of eager customers wanting to drive off with the hottest-selling vehicles, those within the industry are relatively more pragmatic in planning for the new year. Companies are more cautious than last year, with a few enterprises designation 2011 as an adjustment year. A majority of companies said that, compared to this past December, this season the automobile market may experience negative growth.  

Joint venture enterprises decrease 2011 business

"I predict that that annual growth will be around 15%," said Shanghai GM's CEO Ding Lei. With his company leading in annual sales, Mr. Ding is also taking a more prudent approach towards this year's plans. He said that the past two years have been abnormal and already exhausted the market. Additionally, due to predicted inflation this year and the phasing out of preferential policies, it is already indisputable that 2011 will see the end of rapid growth.

Chen Wansong, CEO of Shanghai Volkswagen's Huanan district said, "I believe the market will still grow, but that the rate of growth will not be as fast as in the past two years." Although Mr. Chen was unwilling to quote an actual figure, Shanghai VW's monthly sales plans are much more pragmatic than last year's.

Shanghai GM and Shanghai VW are not the only companies holding this opinion, as other joint ventures are also adjusting their sales targets. Tianjin FAW Toyota and Shanghai VW are setting their growth rates for this year to under 15%. In the past few days every major company released their production and marketing plans. Tianjin FAW Toyota's 2011 sales goal is 550,000 units, an increase of 10% increase, while Dongfeng Nissan's is 772,000 units, a 28.7% increase. Meanwhile, Mazda's Chinese sales goal this year is 28,000 units, representing an increase of 20%. "This is a signal that the direction joint enterprises are taking is towards adjustment," a joint enterprise brand dealer said.

Behind bustling sales lies hidden danger

"Whether they're high or low emission, we don't have any cars at all," one Beijing Hyundai dealer was quoted as saying. Shanghai GM, Shanghai VW, Tianjin FAW Toyota and Dongfeng Nissan's best-selling models are all out of stock. However, dealers believe that the car buying craze at the end of last year has exhausted the market's demand this year. Compared with December of last year, January is undeniably experiencing negative growth. As for the whole season, the possibility of continued negative growth is very high.

"As with past years, the majority of dealers will still place orders in January, but looking at the market as a whole, the bubble is continuing to grow, which means that the chance of it bursting is also increasing," said a dealer with nine years of experience in the industry. "The risk comes from the negative effects of all these large business expanding." According to statistics, in 2012 the six largest automobile companies in China will have a production capability reaching 22 million vehicles. Taking into account these figures and the fact that the majority of automobile companies are in the process of implementing production expansion, if the demand in the market does not meet expectations, it will inevitably lead to production surplus. "This isn't something that hasn't already happened before. When everyone is in a frenzy of doing one thing, it's unavoidable that there will be this danger.”