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Pollution worries as China’s yearly vehicle sales breach 20m level

STEADY RISE Vehicle sales rose 14% to 21.98-million units last year and may exceed 24-million in 2014

STEADY RISE Vehicle sales rose 14% to 21.98-million units last year and may exceed 24-million in 2014

Photo by Bloomberg News

24th January 2014

By: Bloomberg

  

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China became the first country in which more than 20-million vehicles were sold in any given year as Toyota to General Motors (GM) and Volkswagen delivered a record number of cars there.

Total deliveries rose 14% to 21.98-million units last year and may exceed 24-million in 2014, the State-backed China Association of Automobile Manufacturers said earlier this month.

Last year’s sales of passenger vehicles, excluding buses and commercial trucks, climbed to 17.93-million – or 15% more than the US auto industry – and may increase 9% to 11% this year, it said.

While China’s motorisation has been a boon for foreign automakers – all the major ones saw record sales in the country in 2013 – pressure is building on the government to step in as pollution chokes residents and traffic congestion turns roads into parking lots. With air quality deteriorating so much that children and the elderly are regularly warned to stay indoors, Beijing is tightening its vehicle quotas and Tianjin is capping the number of licences issued this year.

“As more and more big cities put in place restriction measures, automakers will have to count on smaller cities and inland areas for growth,” said Harry Chen, a Shenzhen-based analyst with Guotai Junan Securities. “Local automakers will really need to bring on their A-game to compete with foreign joint ventures to survive.”

GM, which regards China as its biggest market, saw sales climb 11% to 3.16-million in the country last year. Though the Detroit-based carmaker outsold all foreign automakers in China for eight straight years, it may lose that lead when Volkswagen reports 2013 figures later this month. The Wolfsburg, Germany-based company surpassed its previous annual record by selling 2.96- million vehicles in the first 11 months.

Ford, which got a late start in China, benefited from the popularity of its Focus car, helping the company post the biggest growth among major foreign automakers. China deliveries surged 49% to 935 813 units, outselling Toyota on annual basis for the first time.

Toyota, the global leader in auto sales, fell to number six among foreign automakers in China, though Japanese carmakers rebounded from the backlash of 2012, when a territorial dispute over a group of uninhabited islands led to violent protests that prompted Chinese consumers to shun Japanese-branded cars.

Toyota’s sales climbed 9.2% to a record 917 500 units in the country and forecast deliveries will climb to more than 1.1-million this year. Nissan and Honda also sold a record number of vehicles after posting declines in 2012.


By contrast, Chinese brands saw their combined market share at home shrink 1.6 percentage points to 40.3%, according to the auto group. Their exports dropped 7.5%, the first decline in five years, because of unstable overseas demand and insufficient competitiveness, it said.

Ford’s Focus was the best- selling car last year, while Great Wall Motors’ Haval topped SUV sales.

In December, passenger- vehicle sales rose 21% to 1.78- million units. Ole Hui, a Hong Kong-based analyst with Mizuho Securities Asia, said last month’s increase was faster than the 15% to 16% growth he had estimated.

The increasing number of cars has come at the expense of air quality, leading the nation’s Industry Ministry to warn last month that auto sales might slow this year as more cities cap the number of new autos to meet central government targets for reductions in air pollutants.

China, the world’s biggest carbon emitter, is home to some of the world’s most polluted cities, with smog levels that can surpass World Health Organisation (WHO) safety thresholds by almost 40 times. Outdoor air pollution was found to cause lung cancer and linked to an increased risk of bladder cancer, a WHO agency said last month, rating it as a carcinogen for the first time.

The northern Tianjin municipality began restricting its car population this year, joining Beijing, Shanghai, Guangzhou and Guiyang in imposing vehicle quotas.

Shanghai, which is considering a congestion charge for motorists, last month experienced record levels of the lung-constricting smog that teary-eyed Beijing expatriates have come to call the ‘Airpocalpyse’.

Edited by Bloomberg

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