Cars

Buyers take foot off the gas as sales slow in passenger vehicle segment

By Li Fangfang (China Daily)
Updated: 2011-04-09 09:45

BEIJING - Sales growth in China's passenger vehicle segment cooled in the first three months of this year. Analysts said that the first single-digit quarterly increase in the last two years indicated a downtrend for the whole year.

Sales of cars, sports-utility vehicles (SUV), multi-purpose vehicles (MPV) and minivans reached 3,527,311 in the first quarter, an increase of 8.6 percent year-on-year, according to the China Passenger Car Association on Friday.

That compared with growth of 75 percent year-on-year in the first quarter of 2010.

The launching ceremony for the General Motors (GM) Co Chevrolet Spark at the eighth China (Guangzhou) International Automobile Exhibition in Guangzhou, China, at the end of last year. Although China's automobile market has slowed in the first quarter, GM still set new sales records for March and the first quarter in its biggest market. [Photo/China Daily]

Following the first year-on-year decline for more than two years - 0.4 percent in February - total domestic passenger vehicle sales recovered in March to rise 8 percent from the same month the previous year. The sales volume reached 1,239,678 units as auto dealers continued to dispose of their 2010 inventories, according to the association.

Related readings:  Honda says March China auto sales down 5.3%  GM says Q1 China auto sales up 10%  China's Feb auto sales down 33%  China January auto sales up 13.8%

Rao Da, the association's secretary-general, said that the stagnancy in the first quarter after last year's boom was partly influenced by negative growth in sales of minivans, following the withdrawal of the government's stimulus policies, including tax cuts and subsidies, at the start of the year.

"Minivan sales will further decrease this year without government support, while the MPV and SUV sectors will be the major engine for the slowing market, because Chinese drivers need functional, multi-purpose vehicles for their day-to-day lives," said Rao.

Automobile sales in China have almost doubled during the past two years, with 18.06 million units sold last year, up from 9.38 million in 2008. That increase was prompted by the government's incentive measures, including tax cuts for those buying vehicles with smaller engine capacities and subsidies for trade-ins and vehicle consumption in rural areas.

Strong sales have helped China to overtake the United States and become the world's biggest automobile market.

However, "the slowdown in the first quarter of this year indicated that China's automobile industry is entering an self-adjustment period and a return to healthy development after the crazy surge in the past two years", said Rao.

He predicted a fall in month-on-month and year-on-year production and sales in April. That decline will result from the negative consequences of the Japanese earthquake and subsequent nuclear crisis, a huge tire-recall program by Kumho Tire Co Ltd, Beijing's quota policy aimed at limiting car sales, and several increases in interest rates and fuel prices.

General Motors Co, the biggest foreign automaker in China, said last week that it delivered 685,583 vehicles to Chinese customers in the first quarter, a rise of 10 percent over the previous year.

The company's March sales figure of 233,014 units was only 1.3 percent higher than that of the same month in 2010, a year which saw sales growth of 28.8 percent year-on-year for the US automaker.