China In May 2012: Sales Up, But Dealers Are Grumpy

TTAC's patent-pending China sales oracle is back to old form again. A few days ago, GM China reported a May sales increase of 21.3 percent. Today, China's Association of Automobile Manufacturers (CAAM) announced its official numbers, and sales are reported to be up 22.6 percent in May. We have to rely on data reported by Reuters on that (not that we would distrust anything from Reuters crack China reporter Fang Yan), and we cannot regale you with the usual minutiae. Why? CAAM's monthly press release is long on words, but devoid of any hard numbers. I guess you had to be there. We will probably get more on Monday. Speaking of the press release, it does not sound happy, despite the big increase: "Commercial vehicle sales continued to decline; own brand sales continue to decline; operating pressure of the first five months of key enterprises has increased, including receivables, liquidity, financial expenses, interest expense and so on." In other words, everything was bad except sales. The day before, the secretary general of the China Passenger Car Association complained about "inventories that had already reached worrisome sizes by the end of May." Dealers in China are sitting on two months of supply on the average, and their gross margin is down to 1 percent. Oh, and what CAAM reports are "deliveries," i.e. sales to dealers, not to customers. from The Truth About Cars http://www.thetruthaboutcars.com

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