According to the Hong Kong Department of Transport (HKDT), passenger car sales for the first 10 months of 2013 year rose 7.0% y-o-y, to 31,065 units. Due to the strong performance for the year thus far, we have upgraded our full-year sales growth forecast to 5.0% y-o-y, to 37,469 units, from 3.0% previously.
Total commercial vehicle (CV) sales for the first 10 months of 2013 came in at 4,888 units, up 40.1% y-o-y. Sales figures for 10M13 have prompted us to upgrade our 2013 CV sales growth forecast to 30.2%, to 5,804 units, from 28.1% previously.
This will then bring our total vehicle sales growth forecast for 2013, to 7.8%, to 43,273 units.
The overwhelmingly dominant part of Hong Kong's auto market will continue to be passenger vehicles. In 2012 passenger car sales totalled 35,685 units, which is just under 89% of all total vehicle sales in the city province. While CV sales contracted by 1.4% in 2012 to 4,456 units, we expect them to grow by 30.2% in 2013 to 5,804 units due to the new round of subsidies offered by the government to incentivise owners of old diesel CVs to replace them, in a bid to battle Hong Kong's worsening air pollution. We forecast the CV segment to average growth of only 0.3% over the 2014-2017 period, to hit 5,867 units by 2017. This is because it is logical to expect the segment to contract in 2014 due to 2013 subsidies front-loading some of the demand in the market.
As Hong Kong investors look to taxi licenses as an alternative investment, the price of a license has surged more than 80% since September 2009. However, we do not see the rapid rise in demand for licenses affecting the taxi fleet size as the supply of new taxis is regulated by the Hong Kong government. Going forward, cashflows from taxi rentals are unlikely to cover the initial license investment cost and speculators may be in for a rude shock as prices of licenses correct.
Due to the limited success of the 'Cash for Clunkers' programme introduced in January 2013 to incentivise...