According to the firm, in September, sales of locally‐ made passenger vehicles rose by 23.5% on the previous year, almost doubling from 11.5% growth in August and 12.8% growth in July. Nearly 45% of the yearly growth in September was attributed to Japanese OEMs, whose sales of passenger vehicles assembled in China surged by 74.5% on a year ago, representing the end of year‐on‐year declines over the previous 12 months.

The light commercial vehicle market contributed much less to the boost of the year‐on‐year growth in the month. Sales of light commercial vehicles reached 0.43 million units, an increase of 7.2% from a year earlier and a slight improvement from the 6.5% seen in August. One thing worth noting, however, is that sales of the Wuling Hongguang and the Chang’an Honor have accelerated significantly in recent months, with share of the 2 models in the minivan segment increasing to 33% in September, from 25% in the first half of this year. CAAM modified the classification of these models from minivan to MPV at the beginning of this year, while LMCA has kept the segment classification unchanged for the time being.

Putting aside the shining year‐on‐year growth, LMC Automotive’s reading into September’s volume is that China’s light vehicle market has been moving in a smooth upward trend this year. China’s light vehicle selling rate (SAAR) has reached 22.2 million units, a modest increase of 0.5% from August 2013. LMCA believes that China’s light vehicle market is on track to achieving its potential growth, amid a relatively neutral environment.

Policy wise, the fuel‐efficient car subsidy will be scaled down from October and should have pushed some purchasing forwards into September. This effect was offset somewhat, however, by the implementation of the “3R: Repair, Replacement and Refund” policy, effective from the same date.

According to CADA, the dealer‐level inventory index stood at 1.35 at the end of August. This was the fourth month‐on‐month decline in a row, and lower than the reading of 1.65 seen at the same time last year. LMCA believes that the low dealer‐level inventory provides room for wholesale acceleration towards the end of this year, while in September the inventory level is not expected to rise rapidly according to the latest information that LMCA has obtained. China’s economy expanded by 7.8% year‐on‐year in Q3 2013, reversing a slowing trend in H1 2013. The government’s efforts to bolster the economy, such as its loose monetary policy and “mini stimulus” measures, contributed to the rebound. However, industrial production, fixed asset investment, and retail sales all slowed slightly in September compared to August, suggesting that the rebound of the economy may be volatile.

With these factors in mind, LMC Automotive expects China’s passenger vehicle market to grow by 13.8% annually in 2013, with total volume revised upwards by around 50,000 to 16.2 million units. For the light vehicle market as a whole, the firm’s forecast remains unchanged at 21.3 million units for 2013.