Friday, 24 May 2024

China car market hits reverse as sales slide again

BEIJING (Reuters) – China’s automobile sales fell 11.7 percent in October from a year earlier, the country’s top auto industry association said on Friday, dragging year-to-date sales growth into negative territory for the first time.

The drop, the steepest since a 26.4 percent tumble at the start of 2012, also marked the fourth straight month of declining sales in the world’s largest auto market.

The sales drop to 2.38 million vehicles comes amid broader slowing economic growth and a biting trade war between China and the United States. It follows an 11.6 percent drop in September and a 3.8 percent fall in August.

The China Association of Automobile Manufacturers (CAAM) said overall sales for the first 10 months of the year totaled 22.87 million vehicles, down 0.1 percent from the same period a year earlier.

“Maintaining positive growth to the end of the year won’t be easy. There could be negative growth,” Yao Jie, vice secretary general of CAAM, said at a briefing in Beijing.

If that happens, it would be the first time since at least the early 1990s that annual car sales in China have contracted.

The industry body said the drop was linked to sluggish consumer demand and the impact of a slowing economy. In previous months CAAM also said that the trade war was impacting sales.

The downtrend in sales underscores how international car makers, from General Motors (GM.N) to Toyota Motor (7203.T), are in for a tough ride at a time when they are increasingly looking toward China as a driver of growth.

China’s car dealers have been pushing for Beijing to help prop up the sector, including a proposal to authorities to cut the level of purchase tax on some smaller cars in half. Reuters’ checks showed that some dealers are now offering big discounts to customers to maintain sales.

Shi Jianhua, another senior CAAM official, added the body was not pushing for short-term stimulus measures to support the market.

CAAM had originally forecast a 3 percent rise for the year, in line with last year’s growth, though still sharply down from a 13.7 percent gain in 2016.

Sales of new-energy vehicles – a category comprising electric battery cars and plug-in electric hybrid vehicles – remained strong, up 51 percent in October, edging down slightly from the pace of growth a month earlier.

That took new-energy vehicle sales in the first 10 months of this year to 860,000 vehicles, up 75.6 percent from the same period a year earlier.

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