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Guangzhou Motor Show 2012: Hyundai, Fiat raise Chinese targets while Nissan, Toyota aim to regain sales in 2013

26 Nov 12

As Japanese automakers downwardly revise their 2012 sales targets, Hyundai and Fiat are expecting stronger sales in China this year.



IHS Automotive perspective

Significance

Japanese automakers have revised their sales targets in China due to the drop in sales in September and October following riots due to the territorial dispute between Japan and China over the Diaoyu/Senkaku Islands.

Implications

Fiat and Hyundai are both looking to see larger volume sales in China this year, specifically in southern China which is generally a stronghold for Japanese brand sales.

Outlook

Japanese automakers are expected to see growth in sales in 2013, if the territorial dispute is peacefully solved or shelved, and are ramping up plans to offer an enhanced product line up to entice consumers back to their showrooms in China – in the meantime however other automakers are keen to claim market share.

At the Guangzhou Motor Show, automakers are all fighting to gain market share in China, with Japanese automakers pushing new models and brands to be launched next year and South Korean and European players aiming to raise the penetration of their brands in China.

Fiat and Hyundai raise 2012 targets

Fiat's local production joint venture (JV) in China has seen better than expected sales of the Viaggio sedan, prompting the brand to raise expectations for annual sales this year. Speaking at the Guangzhou Motor Show, the Guangzhou Auto (GAC)–Fiat JV's general manager Jack Cheng said that with over 6,000 Viaggio cars already sold, the JV aims for sales of 15,000 units by the end of this year, the Italian newspaper Il Sole 24 Ore reports. .

Hyundai aims to sell 850,000 units in China this year, the Yonhap news reports quoting the company's China CEO speaking at the Guangzhou Motor Show. Baek Hyo-heum said that Hyundai will likely sell 60,000 more units then its original target of 790,000 units. In 2013, Hyundai aims to sell 1 million units in China.

Toyota plans new launches for 2013

Toyota will launch two new subsidiary brands in China together with its JV partners in 2013. Hiroji Onishi, head of Toyota's China operations, said at the Guangzhou Motor Show that two new brands will be developed by FAW-Toyota and Guangqi Toyota in China in 2013. Toyota is also strengthening its base in China with a USD689-million research and development (R&D) facility currently being built in Jiangsu province, scheduled to open in 2013. Toyota has also started construction of a new transmission plant that will produce components for hybrid vehicles (see China: 26 July 2012: Toyota Plans Transmission Plant in Chinese City of Changshu), expected to open in 2014. Toyota has set a target for its new energy vehicles to account for at least 20% of sales in China, said Dong Changzheng, deputy executive president of Toyota China, during an interview with China Daily.

Toyota plans to introduce 20 new models in China in the next three years as well as launch two sub brands in China next year. Toyota has previously said that the sub-brands will produced electric and hybrid vehicles (see China: 24 May 2012: Toyota China to Create Separate Brand for Hybrid, Electric Vehicles). Toyota, which is a major player in China's auto market has seen a sudden drop in sales in preceding months due to the territorial dispute between China and Japan. However Onishi is working to recoup lost sales by working to lure back customers by emphasising the importance of China to Toyota as well as the company's strong desire to be liked by Chinese consumers. Speaking at the Guangzhou Motor Show, he said the right attitude to solve problems in China is to "truly love China and think with a Chinese perspective", adding: "China is the most important."

Nissan drops target for 1 million unit sales in 2012

Nissan expects to sell 45,000 units in China in November, the automaker's senior general manager at Dongfeng Motor Group said at the Guangzhou Motor Show. According to a report by Reuters the venture expects sales to be 25% lower than sales in the same month last year, due to anti-Japanese sentiment in China following the two government's dispute over the Diaoyu/Senkaku Islands. Hideki Kimata, senior general manager of Nissan's China JV has said that Nissan has had to revise down its full-year sales targets of 1 million units in China following on from the protests, stating that despite Nissan being committed to China there has been a shift in the company's strategy.

Outlook and implications

Nissan has said that its sales are slowly recovering, following on from drastic declines in sales in September and October in China. The automaker has repaired for free any vehicles damaged in the anti-Japanese protests that took place in September. The company has said it has repaired "several hundred" vehicles that were damaged, according to Kimata. IHS Automotive forecasts show that Nissan will, like other Japanese automakers, continue to lose production in China in 2013 (see China: 16 November 2012: Lost production for Japanese automakers set to continue until 2014) but that if a peaceful solution is found to the islands dispute, our estimates show that it could see sales of 1 million units in China in 2013. Meanwhile given the recent drop in sales Toyota is unlikely to meet its sales target of 1 million units in China this year, our forecasts show (see China: 16 November 2012: Lost production for Japanese automakers set to continue until 2014). Toyota's new R&D centre will be the automaker's biggest globally and will concentrate on hybrid and electric vehicles (see China: 24 October 2012: Toyota Begins Construction of Largest Global R amp;D Centre, Plans to Produce Green Vehicles in China by 2015). Toyota has brought forward the opening date for the plant to 2013, according to reports.

Hyundai has benefited from the drop in demand for Japanese brands, as well as strong interest in the new Sonata launched in China. The Korean brand is seeing the results of increased brand awareness as well as introducing newer models to the Chinese market. IHS Automotive forecasts that Hyundai will likely meet its new target of sales for this year of over 850,000 units, up from 786,688 units sold last year.

Fiat's new Viaggio was launched in China in September this year (see China: 14 September 2012: Fiat Launches Sales of Viaggio in China), marking the first locally produced Fiat car since the JV with Nanjing Auto ceased in 2007. The car, which has been specially designed for the Chinese market, is the only model produced at the new JV facility in Changsha in Hunan province. Fiat's success in China is pinned on the Viaggio which will set the pace for future local production plans in China. The Viaggio sedan is currently built in Changsha, and in 2013 a hatchback version will also be produced. The GAC-Fiat JV will introduce new models for local production in 2014 with IHS Automotive's production forecasts showing six Fiat-brand models in production in China in 2015 with total sales of over 132,000 units of which the Viaggio will account for around 50%.

As the overall growth rate in China's automotive industry rises in single digits, competition to win market share is rising at an exponential rate, with one brand's loss being another's gain. The current outlook for China's auto market sees a continued double-digit growth in the SUV sector while overall the automotive market is still expected to grow in the passenger car segment in the coming years as the demand for personal mobility hits China's interior and western regions.

 
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