by winston » Tue Sep 08, 2015 7:24 pm
China Autos Jump On August Sales Bounce: Don’t Overheat By Shuli Ren
Chinese auto makers rallied today after Great Wall Motor (2333.Hong Kong) and Geely Automobile (0175.Hong Kong) reported strong August sales numbers.
Great Wall Motor’s August sales increased 23% from July (or 19% year-on-year) to 58,270 units. SUV sales, its stronghold, rose 23% from July to 49,249 units. Meanwhile, Geely reported a 7% month-on-month growth.
But the quality of this top-line growth is not good. “We believe GWM’s sales recovery in August was partly due to its production cut in July,” wrote Morgan Stanley‘s Jack Yeung and team.
Back in July, Great Wall Motor cut its production to below its wholesale volume, which allowed its dealers to cut their inventories. In other words, the stronger August sales numbers were partly due to simple re-stocking.
Great Wall Motor said dealers were getting excited, restocking for the peak season in September and October. “Absent a meaningful sales rebound at the retail level, we would not be overly excited by sales growth driven by dealer restocking.
In fact, we view dealer inventory levels as the lead indicator for retail pricing, and any sign of over optimism by OEMs to push for sales is a signal for continued deterioration of pricing in China,” wrote Barclays‘ Yang Song.
In Hong Kong today, Great Wall Motor jumped 13.1%, Geely Automobile rose 11.3%, Brilliance China (1114.Hong Kong) rallied 8.1%, Dongfeng Motor (489.Hong Kong), which partners with Japan’s Nissan, gained 6%, BYD (1211.Hong Kong) was up 3.3%.
Korea’s Hyundai Motor (005380.Korea), a big player in China’s auto market, jumped 3.3%; Japan’s Nissan (7201.Japan) rose 1.4% but Toyota Motor (7203/Japan/TM) was little changed. General Motors (GM), another large player in China, retreated 17.3% this year.
Source: Barron's Asia
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