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Millennials and premium models help lift Geely in China

Volkwagen stays No. 1 as world's largest car market hankers for luxury

SUVs like this one designed by Geely's latest nameplate, Lynk & Co., were hot sellers in China last year. (Photo by Akira Kodaka)

BEIJING -- Total car sales may be slumping in China as consumers fret about a slowing economy and the consequences of the trade war with the U.S., but premium and luxury models appear to be bucking the trend.

Auto sales in China shrank in 2018 for the first time in 28 years, but Zheijiang Geely Holding Group moved up the ranks of market share, overtaking Japanese rivals along the way, according to a report by U.K.-based research company LMC Automotive. The Chinese group was helped by demand for the range from premium car maker Volvo, acquired in 2010. The rise in market share was also driven by Chinese drivers' appetite for SUVs, retaliatory tariffs on imports from America and steps the group has taken to cater to the ride-sharing sector.

Germany's Volkswagen consolidated its position as the top player in the world's largest car market in which overall car sales totaled 24.38 million vehicles, down 3.9% from 2017, according to the report.

The top three automakers remained unchanged in 2018, VW being by far the biggest player. The German company's market share rose 1.1 percentage points to 17.6%, thanks to brisk sales of VW's luxury brands. Porsche posted sales growth of 12%, while Audi gained 11%.

Luxury brands fared well, according to the report. Two German automakers rose up the ranks, Daimler to No. 11 and BMW to No. 12. Daimler's market share inched up 0.4 of a percentage point from a year earlier to 2.9%, while BMW's edged up 0.3 of a percentage point to 2.7%.

Shanghai Automotive Industry Corporation, better known as SAIC, ranked second, with the Chinese automaker's market share inching up 0.3 of a percentage point to 8.6% in 2018.

In its report, LMC Automotive included sales of cars made by SAIC-GM-Wuling Automobile in those of SAIC. SAIC-GM-Wuling Automobile is a compact car production joint venture between SAIC and U.S.-based General Motors. SAIC has a majority stake in the company.

A sales slump hit the joint venture as tax breaks for compact cars ended. But sales of SAIC-brand new energy vehicles were strong.

GM came in third, seeing its market share edge up 0.2 of a percentage point from a year earlier to 8.1% in 2018. The slight rise in market share came as GM's luxury car brand Cadillac saw robust sales growth of nearly 20%.

GM was followed by the privately held Geely group, which rose from sixth to fourth as its market share jumped as much as 1.3 percentage points, to 6.9% in 2018. It can be said that the group was the third-biggest player in the Chinese car market because SAIC's sales include part of GM's sales.

Geely Automobile Holdings, or Geely Auto, is Zheijiang Geely Holding Group's listed subsidiary that primarily sells domestically. Its sales surged 20%, to 1.5 million vehicles. Sharp designs, improved quality and affordable prices propelled the group's sales gain.

The group acquired Swedish premium carmaker Volvo Car Corp., commonly known as Volvo Cars, in 2010 and has since attracted many designers, researchers and development personnel with experience at the world's leading automakers, resulting in better designs and performance.

Geely dealerships, like this one in Shenzhen, Guangdong Province, helped the automaker move 20% more cars in 2018.

SUVs, increasingly popular in China, accounted for nearly 60% of Zheijiang Geely Holding Group's China vehicle sales in 2018.

SUVs imported from the U.S. became subject to China's retaliatory tariffs during the year, but the models' strong performance in China showed that consumption of big-ticket items in the country remains firm.

Lynk & Co., the group's latest brand, also performed well. It has installed functions for car sharing and adopted designs targeting young motorists. According to the group, prices for 60% of the cars it sold in 2018 were between 80,000 yuan and 150,000 yuan (about $11,900 and $22,300). A majority of Geely car buyers were born in the 1990s or later.

The group sold 68,000 new energy vehicles during the year. Its ride-sharing subsidiary, Caocao Zhuanche, operates in 30 Chinese cities and uses 31,000 new energy vehicles produced and sold by its parent company. The Chinese government is also a big new energy customer.

Japan's Toyota Motor rose from seventh to sixth as its market share increased 1 percentage point to 6.3%, driven by robust sales of Lexus cars, partly due to China's import tariff reduction.

The alliance of French automaker Renault and Japanese partners Nissan Motor and Mitsubishi Motors slightly gained market share in China in 2018, as did Honda Motor. The alliance's and Japanese automaker's shares rose only slightly. Renault, Nissan and Mitsubishi finished with a combined 6.5% share of the market. Honda was at 6%.

Meanwhile, sales of major state-owned Chinese automakers' own-brand cars slumped. China Changan Automobile Group fell from 9th place to 10th as its market share slipped 0.7 of a percentage point to 3.5%.

Beijing Automotive Group Co., also known as BAIC Group, Dongfeng Motor Group and China FAW Group also lost market share.

U.S. automaker Ford Motor, which failed to redesign any of its popular models, is struggling more than any other automaker in China. It is also suffering from confusion over top personnel changes at its Chinese operations.

Ford's share of China's car market dropped 1.7 percentage points to 1.9%. The automaker was ranked 18th in 2018, a big fall from No. 11 the previous year.

France's PSA Group and Fiat Chrysler Automobiles also saw their shares of China's car market shrink.

According to figures released by the China Association of Automobile Manufacturers on Feb. 18, January new car sales in the country plummeted 15.8% from a year earlier to 2.367 million vehicles. Passenger cars, which account for 90% of overall new auto sales in China, dived 17.7%. SUVs, which so far have led growth in the Chinese auto market, tumbled 18.9%.

As this year unfolds, Chinese and foreign automakers will fight it out in a market that is attracting fewer buyers.

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