China and India (CHINDIA) established themselves as automobile market leaders by posting a staggering 36.5% and 14% growth, respectively, in auto sales during June. Government incentives such as sales tax and interest rate cuts as well as subsidies to trade in older cars are the principal factors behind the growth.
Passenger car sales in China totaled 872,900 units, outpacing the U.S. by 13,053 units during June.
Passenger car sales in India were up 8% during the month, a significant improvement from a 4% decrease in May. Apart from Government incentives, new models such as Maruti Suzuki Ritz, Honda Jazz and Fiat Grande Punto pushed sales growth in the country.
The results will surely attract global automakers toward these countries to drive revenues in a gloomy auto industry.
During June, the U.S. auto industry posted a sales decline of 28%. Industry sales fell short of the targeted annual rate of 10 million units by 310,000 units. Ford (F) reported a 10.9% sales decline. Sales at General Motors (GMGMQ), the largest carmaker by volume, tumbled 33.6%. However, sales at Ford and General Motors surged 14% and 38%, respectively, in the first half of the year in China.
The European auto market is yet to revive. Both the leading automakers of Germany – BMW (BMW) and Daimler (DAI) – reported declines of 13% and 7%, respectively, in car sales during June. Nevertheless, the automakers’ sales were strong in China during the month.
We continue to recommend DAI and F as Holds.
Read the full analyst report on “F”
Read the full analyst report on “GMGMQ”
Read the full analyst report on “DAI”
Zacks Investment Research
