The China Association of Automobile Manufacturers hadn't posted its official sales numbers for June at the time of this writing, but it looks pretty clear that automakers are seeing rising demand as the impact from the partial phase-out of a purchase tax rebate fades into the past. That's good news, because through the first five months of 2017, sales in China were up a meager 1.5% compared to the prior year, to 9.42 million units.
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Let's run through some of the highlights from Detroit automakers Ford Motor Company (NYSE: F) and General Motors (NYSE: GM), and from the impressive gains made by their Japanese counterparts.
General Motors had its best June sales result ever in China, with deliveries up 4.3% to more than 285,000 vehicles. Its Buick, Cadillac, and Baojun brands all recorded their best June ever, driven by the SUV segment, which recorded a 42% jump in sales last month and remains its best-performing segment.
GM has done well in China, but the big story lately has easily been its Cadillac brand. Globally, Cadillac sold 27,636 units in June, which was a healthy 7.2% jump from the prior year, but its sales in China were up nearly 35%. That impressive rise is topped only by Cadillac's year-to-date sales in China, which are up a strong 75.4% to over 80,000 vehicles. In fact, through the first half of 2017, GM is on pace to sell more Cadillacs for the year in China than in the U.S. market.
Detroit's largest automaker has no plans to slow down; it's preparing to launch 10 new or refreshed models in China over the next six months to keep demand and pricing strong.
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GM wasn't the only Detroit automaker to record its best ever June in China; Ford announced impressive results as well. Its sales jumped 15% last month to just over 100,500 vehicles. The major story in Ford's data is the sequential improvement in sales: After a dismal first quarter in which Ford saw a 19% sales decline, the company achieved a 7% increase in Q2 that was capped off by the aforementioned 15% rise in June. That said, those Q2 gains weren't enough to offset the Q1 slump; sales remain down 7% year to date to 537,522 units, behind its major rivals.
Lincoln is having its own success story, albeit at a much lower volume than General Motors' Cadillac marque, and recorded a 97% jump in year-to-date sales compared to 2016. Lincoln's MKC and Navigator models recorded 30% and 29% sales gains in June, respectively. Even Ford's sedans -- which have struggled all year long -- finally rebounded last month. Sales of the Escort, Focus, Mondeo, and Taurus collectively jumped 17% in June.
The largest problem for Ford might be holding its pricing, which the automaker needs to do in China if its Asia-Pacific region is to help offset potential weakness in Europe -- from Brexit implications -- and a plateauing North American market.
Japanese automakers surge
Despite Ford posting a 15% jump, it wasn't able to outsell its Japanese rivals last month. Honda Motor Co.'s (NYSE: HMC) sales were 18% higher year over year at 113,769 vehicles. Honda has also been able to shake off some of the early year weakness in the Chinese market to achieve a 19% increase year to date, to 644,167 units. Nissan Motor Co. (NASDAQOTH: NSANY) and Toyota Motor Corp. (NYSE: TM) also had strong months, with sales rising 8.9% and 10%, respectively, to 118,769 vehicles and 106,900 vehicles. Year to date, Nissan still managed to edge out Honda for the top spot, selling 650,525 vehicles, while Toyota was a little bit behind, selling 624,000 units.
Automakers are hopeful that the stronger demand the market displayed in June will continue through the back half of the year, especially considering that the first five months of 2017 brought a meager 1.5% gain in sales. Investors can expect a similar sales funk during early 2018 -- the other half of the purchase-tax rebate on small-engine cars is set to end on Dec. 31, lifting it from 7.5% to 10%, its regular level. But until then, automakers are confident that sales will be strong.
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