Boston, MA -- (ReleaseWire) -- 04/16/2014 -- According to the Hong Kong Department of Transport (HKDT), passenger car sales declined 16.8% yearon- year (y-o-y) in January 2014, to 2,612 units. This was after the segment's strong performance in 2013, when sales grew 6.8%, to 38,119 units.
In 2013, vehicle sales grew by 9.9%, to 44,116 units, helped by the surge in commercial vehicle (CV) sales due to the newly enacted subsidies. However, we expect growth to head sharply lower in 2014 as the initial boost in CV sales makes way to a more gradual trade-in process of these old trucks.
Commercial vehicle (CV) sales saw 34.6% growth in 2013, to 5,997 units. This was due to the cash for clunkers programme introduced by the government, which gives subsidies to owners to replace their pre- Euro IV CVs. We expect CV sales to experience a small contraction in 2014 due to the high base effects of 2013. Furthermore, the CV replacement programme has not been that popular resulting in the government increasing the amount of subsidies offered. However, we expect the take-up rate to still remain slow.
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The overwhelmingly dominant part of Hong Kong's auto market will continue to be passenger vehicles. In 2013, passenger car sales totalled 38,119 units, which was just fewer than 87% of total vehicle sales in the city province.
We forecast CV sales to average growth of only 1.6% over the 2014-2018 period, to hit 6,358 units by 2018. As the take-up rate for government incentives to replace older CVs slows, sales of new CVs will also take a hit.
Due to the limited success of the 'Cash for Clunkers' programme introduced in January 2013 to incentivise CV owners to replace their pre-Euro IV vehicles, the Hong Kong government intends to make it more favourable in order to increase participation rates. However, even with greater subsidies, affordability remains a concern and the continued tepid response to this scheme could see more heavy-handed regulation to phase out polluting CVs.
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