Passenger-car sales in China not doing so great anymore

Article by Christian Andrei, on December 11, 2011

Passenger-car sales in China had its slowest ever pace in six months. This is believed to be due to monetary tightening and the end of government incentives. The demand for Chery Automobile Co. and Honda Motor Co. vehicles dropped. Last Friday, the China Association of Automobile Manufacturers said that wholesale deliveries, such as sport-utility vehicles and minivans, increased by 0.3% to 1.34 million units last month.

In comparison, the five analysts surveyed by Bloomberg arrived at a 0.5% median estimate. It is considered the most sluggish pace since May, when sales fell by 0.1% to 1.04 million.

Last year, China’s sales increased by 32%. But the current year’s sales are lower as purchases are discouraged due to inflation, higher interest rates and the end of a two-year stimulus plan. The group added that deliveries for 2011 may have its smallest increase during the past 13 years, adding to indications of the slowing economy in China.

Yale Zhang, managing director at industry consultant Autoforesight Shanghai Co., said that inflation and gasoline prices continue to be high while the outlook remains uncertain. Zhang added that as a result, the consumers' will to purchase has been reduced.

The association, which has reduced its market forecast two times so far this year, believes that the vehicles that will be shipped to Chinese dealerships will increase between 3% and 5% in 2011. In 2010, this figure rose by 32% due to tax breaks and rebates for buyers in rural areas.

This is the first time that the Chinese market is increasing at a slower rate than the U.S. light-vehicle retail sales, according to figures from the association that go as far back as 1998. According to Dong Yang, deputy head of the association, China's auto sales are "very likely" to gain over 2% this year.

Topics: china, sales

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