China Numbers Incredibly Strong

In case you haven’t noticed, there are some pretty incredible numbers coming out of China these days. For example, Kate Zhu, executive director at Morgan Stanley Research, reports that preliminary numbers indicate that car sales in July may be as much as 87 percent ahead of last year, driven by strong performances of small and medium cars at Nissan, GM, Hyundai and PSA Citroen. Kate reports that her colleagues in the Morgan Stanley Shanghai office have to wait more than three weeks for a new GM Regal or a VW Polo.

For the first half of the year, car sales are up 19.5 percent over last year, causing  Kate to re-look at her 6.5 percent China passenger car industry volume growth estimate for all of 2009. As a result of the strong first half, expectations for a strong second half that is already off to a good start in July, as well as the fact that the China economist at Morgan Stanley has a new 2009 GDP forecast of 9.0 percent, Kate has raised her estimate for car sales to rise 27 percent for the whole year.

No tinkering around the edges for Kate! In all of my years in business, I don’t know that I have ever seen an analyst quadruple a full-year growth estimate for a major industry at the halfway mark. The amazing part is that Kate will probably prove to be right.

On other fronts, after crossing the 3,000 mark at the end of June, the Shanghai Composite Index is adding another 400 or so points in July. The Shanghai index is now up almost 90 percent since the beginning of the year.

3 Responses to “China Numbers Incredibly Strong”

  1. Hi Jack,

    But what’s your take on Kate’s metrics? Or is there something you’re waiting to see?

    –ADM

  2. ADM,

    No, I’m not waiting to see anything. I’ve found Kate to be one of the best analysts as far as the China automotive industry is concerned, so I am sure that her revised projections are based on solid reasoning. I just think its amazing how the industry has responded this year. Obviously, there is a great deal of pent up demand in rural areas that is being helped by the 13% subsidies.

  3. Hi Jack,

    Thanks for this — not to mention the flabbergasting 87% car hike this past July! Just torrential!

    Can’t wait to see what August’s going to bring. While EU slums in its summer sleep, China surges.

    –ADM