CRRC Profit Dips as Buildup Crests

Source: Caixin

BEIJING— Leading Chinese rail equipment maker CRRC Corp. Ltd. expects its train sales to drop by a third over the next decade, as domestic purchasing starts to subside following a multitrillionyuan building spree... "The year 2015 was a historic high," said the source... "We expect Chinese train sales won't ever surpass those levels again."

PSR Analysis: The decline in sales by China Railway Rolling Stock Corp. (CRRC) that is estimated to continue through 2025 provides the company with further impetus to look for continued expansion into overseas markets, particularly for their highspeed trains. While a domestic market for lowerspeed rail does exist within China's interior regions, longterm success will depend upon improved sales of their premium offerings overseas. From a strategic vantage point, gaining a clear understanding of which markets provide the greatest opportunity is essential. On the R&D side, addressing the recent setbacks experienced overseas is critical. PSR


Ford Q1 2017 China Sales Slump as Tax Cut Rolled Back

Source: Reuters

BEIJING—Ford Motor Co. said that its China vehicle sales fell by 21% in Q1 2017, compared with a year ago, after a tax cut on smallengined vehicles was rolled back.

Ford trailed many of its competitors in China in the first quarter with Toyota Motor Corp (7203.T), Honda Motor Co Ltd (7267.T) and others disclosing sales increases and the automakers' association reporting a 7% rise for overall sales.

PSR Analysis: Legislation continues to play a key role in China vehicle sales. At the end of 2016, we saw a huge spike in commercial vehicle sales ahead of the GB1589 implementation that affected vehicle dimensions. Electric car sales have regularly ebbed and flowed with the presence – or absence – of government subsidies. In this case, vehicles with engine displacements less than 1.6 liters were eligible for a reduced sales tax rate of 5%. When that jumped to 7.5% in January, sales took a nosedive. One thing is for certain, we can expect continued instability as the government moves forward with implementation of ever stricter emissions controls and fuel efficiency standards. PSR