Growth in China Passenger Car Market Slows

15 August 2008

China Daily. Statistics from the China Association of Automobile Manufacturers (CAAM) showed that July sales of sedans, multipurpose vehicles and sport utility vehicles in China climbed 6.79% from a year earlier, the smallest monthly gain and the first single-digit rise in two years.

China’s passenger car market is slowing faster than expected, as a result of a fuel price hike, the slowing economy and the rising vehicle purchase tax. The sector has maintained a high level of growth of between 20 and 30 percent annually since 2005 and consequently China has been seen as the most important market for global auto conglomerates.

“More obviously, the sales growth in the sedan segment has cooled from more than 20 percent in the first quarter, 10 percent in the second quarter to the current 1.6 percent,” said Zhao Xuegui, an analyst from Guosen Securities. “It steadily slowed in the first half, but may see a vertical dive after July,” Zhao said.

In late June, Beijing raised fuel prices by nearly 20% to cut oil use and curb pollution—the first rise in seven months. China is also restructuring its tax on vehicles to discourage the purchase of larger-displacement engines. (Earlier post.)