The slowing economy in China may result to auto sales failing to meet the sales forecast, according to an official from the China Association of Automobile Manufacturers. The state-backed auto association said that the total vehicle deliveries were expected to go up 8% this year but it may fail to reach 5% due to the "difficult" economic backdrop. Gu Xianghua, a deputy to the secretary general at CAAM, said during a conference in Qingdao that the demand for commercial automobiles would be affected the most. This would result in China’s growing at a slower pace than the expected increases in the U.S., Japan and India.
There is an escalating pessimism due to declining sales in China over a sluggish economy and rising fuel prices. What Gu is saying is that Chinese auto sales, which rose by more than fivefold in the past decade, could expand at a slower pace than the economy.
For this month, Premier Wen Jiabao expects that the gross domestic product will expand by 7.5%, the lowest target since 2004. The planning agency's website stated that the country had raised its fuel prices for the second time in less than six weeks.
Gu's projection falls short of the 7.8% growth that Macquarie Group Ltd. had estimated. Macquarie predicted that global vehicle sales growth will likely accelerate to 4.6% this year from 4.1% in 2011, led by a 7.2% growth in the U.S., 20% expansion in Japan and a 10% advance in India. The cynicism of the deputy secretary general comes less than a month after CAAM Vice Secretary-General Xiong Chuanlin, who ranks one level below Gu, said that the state-backed group could adjust its growth prediction for this year.