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China cools but doesn’t chill
Pick up in mainly top-end 2nd quarter car demand lessens chance of feared hard landing for China’s otherwise limp car sales balloon

Published: Fri, 27 July 2012 14:28:09 GMT

Most leading western carmakers in China began the second half of this year with a great deal more optimism, as a notably brighter looking set of car sales data from China’s second quarter dismissed earlier fears of a sharp slowing in Chinese domestic new car demand.

A markedly cooler than earlier expected start to this year, with first quarter sales growing by just 3.2 per cent, gave way to an altogether sunnier second quarter when China’s cheque-ready shoppers headed back into previously sparsely populated car showrooms, boosting second quarter sales by 11.5 per cent.

Chinese second quarter passenger cars sales growth excluding built up imports

This gave rise to now widely shared industry predictions that this year’s second half will be markedly better than earlier feared.

Halfway through the current year, consensus expectations are for slow single-digit car sales growth during the rest of this year.

AID forecasters believe that this year's car sales total in mainland China, excluding all light commercials and fully built-up car imports, is currently tracking around 12.1 million cars, which translates into a year-on-year growth rate of around 5 per cent for the whole of this year.

This means a gradually slowing rate of advance during this year’s second half, driven primarily by higher than average demand for cars in the Golf class and above.

Demand for built-up imports, that’s chiefly pricey Executive- and Luxury-class cars as well as premium-badge SUVs and Crossovers, is comfortably expected to outpace China’s otherwise slowing overall car market during this year’s second half.

Cloudier skies ahead, but Volkswagen Group sails on serenely

Unlike China’s leading intrinsic carmakers, whose grip on the market has weakened notably since the start of this year, market leading Volkswagen Group has continued to sail on serenely.

Whether because of its latest product avalanche in China, or the lure of more mouthwatering incentives, reality is that the group has continued to outperform China’s markedly less bullish overall new car market.

In both June and the six months to date Volkswagen Group continued to steal market share from some of its main rivals, testament to its markedly sharper competitive edge

China peak traffic bus
Volkswagen Group has continued to sail on serenely in China

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