High performing Honda has added to its China SUV portfolio with the just launched Acura CDX - a compact SUV model - locally made and designed primarily for the Chinese market.

High performing Honda has added to its China SUV portfolio with the just launched Acura CDX - a compact SUV model - locally made and designed primarily for the Chinese market.

Although worries persist over the long-term outlook for China's vehicle market, analysis of the latest sales data shows that the SUV segment is continuing to show strong growth that is benefitting Japanese and domestic brands in particular.

Data from LMC Automotive shows that passenger vehicle sales in China in July expanded by 27.8% year-on-year (YoY) to 1,657,484 units. However, light commercial vehicle sales were down (YoY), with sales plunging by 11.4% to 0.22m units, driven by the dismal state of the Mini Bus segment. For the Light Vehicle (LV) market as a whole, sales improved by 21.6% YoY in July, with a total of 1.87m units sold.

So far this year, to the end of July, the passenger vehicle market is up 13% to 12.86m units and is forecast by LMC Automotive to hit 23.2m units this year (which would be 9% up on 2015). Light commercial vehicle sales this year are down 12% to 1.9m units. LCV sales are forecast at a little over 3.3m units in 2016, which would be 11% down on 2015.

The decline to Mini Bus sales is mirrored by a surge in SUV sales within the passenger vehicles sector, according to LMC's analysis. It says the 'exceptional momentum in the SUV segment shows no signs of abating', with sales soaring by 40% in July, as the segment gained a 38.8% share of the overall passenger vehicle market. Delving deeper into the SUV market as a whole reveals that Japanese-branded models enjoyed steadily strengthening sales, with Honda making a particularly noteworthy contribution, driven by improved CR-V volumes and the brand's timely model release program, which helped to reinforce Honda's market position within the key Sub-Compact SUV sector.

LMC says that European-branded SUVs, on the other hand, put in a less dazzling performance, due, in part, to the comparatively lower appeal of their products, but also to the fact that several models, such as the VW Tiguan, are approaching the end of their lifecycles, with next-generation models waiting in the wings.

Looking further ahead, LMC expects to see European brands 'explode onto the SUV market in China over the next two years, with increasing numbers of new models joining the race, bringing even greater intensity to an already highly competitive segment'.

July was a good month for Mercedes

LMC's analysis of China's Premium segment reveals that Mercedes-Benz expanded within virtually every sub-segment, on the back of robust sales of its new generation of products. Sales of the S-Class almost doubled, "far outpacing the competition", LMC said, while the C-Class "outsold both the BMW 3 and Audi A4 to hit the top spot in the Midsize Luxury Car sector in July". Meanwhile, the automaker's SUVs, the GLA and GLC, were hot on the heels of the leading models in their respective sub-segments. LMC also points out that a new E-Class was launched in August to enthusiastic acclaim, and is set to exert considerable pressure on market rivals, the BMW 5 and Audi A6. After a period of sluggish sales, LMC said that "all indications are that the top-tier of the Luxury segment has recovered its previous form".

Positive start to Q3, raised sales targets

LMC said that the rosy picture painted by July's robust performance marks a positive start to the third quarter, so much so that it has prompted a number of automakers to raise their sales targets for the year. However, it cautioned that until the future of China's purchase tax cut (due to expire at the end of the year) policy is clarified, the second half of the year will remain shrouded in uncertainty.

China vehicle sales and production by major vehicle category

JulyYoY %chYTDYoY %ch2016FYoY %ch
Sales 1,950,4582115,375,8139
PV1,657,4842812,864,6491323,190,3079
LCV216,824-111,912,175-121,228,241-11
M&H CV76,15019598,98916
Production1,975,8682914,912,0859
PV1,694,6973612,415,6521322,247,54611
LCV206,783-61,897,328-133,228,240-11
M&H CV74,38822599,10516