‘While record‐breaking sales of China’s locally‐made Light Vehicles were achieved in January 2014 with 2.07 million units being moved, the market only posted year‐on‐year growth of 6.0%. This was the lowest since February 2013, falling well below the year‐on‐year growth of 17% seen in Q4 2013.

‘This result was led by the Passenger Vehicle market, with the annual sales growth of locally‐made Passenger Vehicles falling to 8% in January 2014, from 23% in Q4 2013. Sales of Light Commercial Vehicles remained subdued with an annual decline of 1%, the same decline as seen in the previous December.

‘We do believe, however, that the trend seen in Q4 2013 extended into this January. The selling rate of Passenger Vehicles reached 18.12 million units, almost the same as the level seen in December 2013. Furthermore, considering the spike‐like selling rate achieved in January 2013, the annual growth drop this January could be attributed to a higher base on the year‐on‐year comparison.

‘With a coherent selling rate of Passenger Vehicle wholesales, stable dealer‐level inventory in January also suggests that real demand was developing smoothly and consistently until the Spring Festival.

‘What is particularly worth noting, however, is the structural change to January wholesales.

‘With year‐on‐year growth of wholesales sliding to 8% in Q4 2013, Volkswagen posted growth of 20% on the previous year in January for locally‐made Passenger Vehicle sales, and contributed to nearly 50% of the overall market growth in the month. With declining market share seen in Q4 2013, we believe that Volkswagen slowed its pace of wholesales towards the year end, given its satisfying sales results achieved over the previous quarters of 2013.

‘On the other hand the sales performance of some Japanese and Chinese car makers reversed, moving in the opposite direction. Although Japanese car makers posted seemingly strong annual growth of 12%, owing to the low base seen last January, their share in the locally‐made Passenger Vehicle market fell to 15% this January, from 21% in Q4 2013. With 8% growth achieved in the overall Passenger Vehicle market, some key Chinese car makers, namely Geely, Great Wall, and BYD, posted sales declines on the previous year.

‘These sudden changes in the market suggest that the numbers we saw for wholesales at the year's end have been manipulated to some extent, given the different levels achieved by car makers for their own annual targets. The January sales results have become an important complement to judging the trend of carmakers in the market.’