China

Great Wall Motor May Sales Down 4%; Passenger Cars Sales Down 46%

This article was originally published on June 6, 2014 at 8:19 am EST

Summary:

  • Great Wall Motor (HK: 2333/ CH: 601633) reported it sold 298,871 cars in May, a 4% decrease from same period last year.
  • The company sold 54,933 pickup trucks, 189,442 sport utility vehicles (SUV), and 54,484 passenger cars.

Why It Matters:

  • The sales of pickup trucks decreased 2% from same period last year and sales of passenger cars decreased 46%; however, sport utility vehicles (SUV) sales increased 22%. Local articles suggest that Great Wall Motor is focused on developing new SUV car models and thus putting less resources into the passenger car unit. Compared to passenger cars made by other companies, Great Wall Motor’s C30 and C50 passenger car models are overpriced.
  • Local brokerages were supportive of Great Wall Motor’s strategy that focused on the development of the high-end H8 SUV model; but after a second delay of the H8 SUV, many brokers including GF Securities and UBS China downgraded their earnings forecast and price target for Great Wall Motor.