With the next generation Civic having made its Chinese market debut, Dongfeng Honda is faced with the tricky question of what to do of its stock of old Civics. Dongfeng Honda dealerships have already began offering various incentives, such as loan plans and complete insurance policies, in order to get rid of its inventory.
Dongfeng Honda is not the only manufacturer having to deal with such issues. Japanese manufacturers as a whole failed to achieve successful results last year; Honda, Nissan, Toyota, Suzuki, Mazda and Mitsubishi's combined 2013 sales volume totaled 3.43 million units. In order to reverse this trend and achieve more ambitious sales targets, these manufacturers have been rushing to introduce new models to the Chinese market, including the Mazda Atenza, Mazda Azteca, new Toyota Corolla, Toyota Levin, next generation Nissan X-Trail and Nissan Venucia R30. At the same time, current models are being redesigned to further boost their competiveness.
As these manufacturers make the jump to new models, they are undergoing extreme discrepancies in sales. Reports from Nissan, Toyota, Honda and Mazda highlight severe falls and rises in sales volume during these transitional periods.
Honda is one good example of this phenomenon. Honda saw its 27.68 year-on-year sales growth achieved during February decrease to negative growth in the months of March and April. At that time its Guangqi Toyota joint venture reported significant sales decreases. When reached for comment, a representative from the JV attributed the sales decline to the number of new models suddenly available at the time. The Accord LX had just made its market debut, while updates to the Accord Crosstour, Fit and Odyssey were also being introduced. Product assembly lines were being tested to the maximum, while dealerships were scrambling for solutions on how to clear their inventories. These and other factors contributed to drops in sales performances. After this transitional period ended, Honda saw its sales recover from May onwards. The manufacturer sold a total of 70,739 vehicles in China last month, achieving year-on-year sales growth of 15.8 percent. The Accord XL and New Fit played important roles in helping the manufacturer achieve those sales numbers. Honda has sold a total of 353,400 vehicles in the first half of the year, up 11.7 percent from its sales volume in the first half of 2012.
While Honda has already passed its transitional period, Toyota is still not finish with its. The manufacturer's Chinese sales fell 2.7 percent in May; that decline grew to 7.6 percent the following month. This marks the end to Toyota's constant sales growth, which lasted nine consecutive months. The sales drops have been attributed to the replacing of its flagship Corolla; the next generation Corolla made its market debut late last June, causing sales of the then current model to fall. According to Gasgoo.com (Chinese) statistics, FAW Toyota sold just 266 Corollas in May, far less than the over 10,000 units it sold in previous months.
Nissan and Mazda have also undergone similar experiences with their new models. With the help of the new X-Trail, Nissan has sold a total of 620,400 vehicles in the country since the beginning of the year, up 14.6 percent from last year. Mazda's Chinese sales jumped an outstanding 37 percent in June. Mazda, which introduced the new Azteca and Atenza this year, has sold 98,852 vehicles over the first half of the year.
Industry Analyst Zhang Zhiyong explained that the introduction of new models is still a very effective way to maintain sales in the Chinese market. The reason that Japanese manufacturers are introducing so many models over such a short period of time is because they are updating their whole product lines. Mr. Zhang added that Japanese manufacturers are learning from the successes of VW, Hyundai and other foreign manufacturers by increasing the pace with which they introduce new models. He explains that Chinese buyers prefer new models and are not particularly brand loyal. VW and Hyundai have succeeded because they have been constantly introducing new products to capture new buyers, which is something Japanese manufacturers are now trying to imitate.
