It has become fashionable to talk about troubles in the Chinese car market, and it is done so unhindered by the fact that a formerly red-hot Chinese car market simply turned into a cozily growing car market. 5 percent growth still will turn 23 million into 24 million. Today, I finally met an expert who was able to explain the Chinese car market to mere mortals. The expert’s name was Carlos Ghosn, and I met him today at Nissan’s annual results conference. “The numbers coming out of China are confusing,” Ghosn conceded. “They are confusing for you, and they even are confusing for us.”
Then, Ghosn took the time to deconfuse the Chinese car market:
“Some car manufacturers report wholesale numbers. Other manufacturers report retail sales. Some manufacturers are into passenger cars only, some make passenger cars and light commercial vehicles. Some manufacturers report passenger car sales, some add light commercial vehicles, and it results in a big mess.”
GM started reporting retail sales in April after reporting wholesale numbers before. Nissan has given retail sales data for China since January. Today, Ghosn explained what such a shift could possibly mask: “When you lower inventory at dealers, retail numbers still look good, while wholesale numbers naturally go down for a while.”
“At the end of the day,” Ghosn said, “the most important number is retail sales.” In the first four months of the year, Nissan’s passenger car retail sales were up 20%. Total passenger car retail sales were up approximately 12 percent in the first 4 months. In Light Commercial Vehicles, the numbers are much worse.”
Ghosn explained that manufacturers have a hard time supplying LCVs that comply with new tougher emission rules, and that the weak commercial data reflect a lack of supply, not a lack of demand.
“We are not worried about the Chinese market overall. Competition is getting tougher, and that’s what’s making all carmakers a little nervous. The Chinese market so far has been growing so fast that everybody was struggling to produce. Now that the growth is healthy, competition plays a role. Nothing in the numbers we are seeing out of China is preoccupying. Yes, competition is getting tougher, yes, pricing activities start to show up. China is becoming yet another large car market where competition is tough.”