The following is an excerpt from Shuli Ren | February 20, 2017 | Barrons.com |
Despite U.S. President Donald Trump’s tough talk on auto makers and trade, we have seen a spectacular rise in China’s car manufacturers this year.
Just two months into the calendar year, Geely Auto (175.Hong Kong), which did not even sell SUVs a year ago, has soared 47.8%. Great Wall Motor (2333.Hong Kong), China’s market leader in the fast-growing SUV segment, is up 28%. Guangzhou Auto (2238.Hong Kong) has advanced 40%.
Strong January sales numbers have underpinned the rise of these auto stocks despite analyst predictions that the car market in China may have peaked. In October 2015, Beijing slashed the transaction sales tax for passenger cars by half in an attempt to boost industrial investment; as a result, auto sales in China boomed in 2016. Analysts warned of modest growth if any for this year as anyone wanting to buy a new car would have done so already. See my December 2 blog “China’s Car Market To Drive Off The Cliff, Cautions Morgan Stanley”.
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