China and India — CHINDIA, in popular lingo — are now automobile market leaders in passenger cars by posting a staggering 34% increase to 1.11 million vehicles and 39.5% to 143,976 vehicles, respectively, during April. In contrast, passenger car sales in the U.S. during the month rose 20%.
In China, government incentives such as sales tax and interest rate cuts as well as subsidies to trade in older cars were the principal factors behind the growth in car sales. In order to boost public consumption, the government is following a $600 billion economic stimulus plan.
Car sales in China were dominated by joint ventures (JV) with big global automakers including Ford Motor Co. (F) and General Motors (MTLQQ). Ford’s Chinese JV, Changan Ford Sales Co., recorded a sales increase of 38% to 26,598 vehicles.
General Motors and its JV partners in the country have reported a sales increase of 41% to 213,115 vehicles. Sales in the company’s JV with Shanghai Automotive Industry Corp. (“SAIC”) soared 62% to 89,562 vehicles while sales in the SAIC-GM-Wuling JV escalated 19% to 113,633 vehicles.
Among the domestic automakers, Chery Automobile Co. ruled with sales of 50,144 vehicles followed by BYD Auto with 45,110 vehicles.
In India, Maruti Suzuki, accounting for 47.7% of sales, dominated sales of 143,976 cars in April. A rapidly growing economy, easy availability of credit and bulk purchases at the end of the financial year in March in order to take advantage of tax breaks on depreciation were the driving factors behind the sale growth in the country.
However, rising costs of raw materials including pig iron and steel, as well as new emission standards, are some of the concerns facing India’s auto industry.
The results will no doubt attract global automakers to continue to seek refuge in these countries to drive revenues in a sluggish auto industry and to tap the growing market potential in two of Asia’s largest economies.
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