China Automobiles:Nov car market volumes up 21.9%yoy;Uncertainty remains for Dec and 2017growth

Nov car market volumes up 21.9% yoy

On Dec 8, ChinaAutoMarket released preliminaryNov data. Local-made passenger car retail vol. (exexportand minivan) was +21.9% yoy (YTD +18.3%yoy), above our expectations, on strongeraffordability on higher discounts esp. in SUV spaceand potential pre-buy effect. Dec and 2017 growthdepends on changes of stimulus policy (5%purchase tax cut for cars with sub-1.6L enginesizes) announced at the end of Sep 2015 (ifstimulus expires at year end, we expect extra frontloadeddemand to Dec from 2017; if stimulus getsextended into 2017, Dec and 2017 demand shouldbe lower and higher, respectively).

Korean/Japanese brands gained share while

European/American/Chinese brands lostKorean/Japanese brands gained market sharewhile European/American/Chinese brands lostmom. Chinese brands share up 2.9% yoy though.

Inventory index might decline slightly in Nov

Wholesale vol. was 7.1% above retail in Nov, thuswe expect the absolute channel inventory toincrease, but the inventory index in months ofsales vol. (the index was 1.32 in Oct) mightdecrease slightly in Nov on strong retail volumes.