China April Car Sales Growth Slows on Fuel Prices, Quake

Bloomberg News, May 10, 2011

China April Car Sales Growth Slows on Fuel Prices, Quake
BYD Co. vehicles are parked at a dealership in Beijing. Photographer: Nelson Ching/Bloomberg

China’s p

assenger-car sales slowed in April from the previous month as the government raised fuel prices and Japan’s record earthquake slowed deliveries.

Deliveries of cars including multipurpose and sport-utility vehicles to dealerships rose 2.8 percent from a year earlier to 1.14 million units, the China Association of Automobile Manufacturers said in a statement today. Sales climbed 6.5 percent in March.

Automakers including General Motors Co. (GM), BYD Co. and Toyota Motor Corp. posted lower sales as China increased retail gasoline and diesel prices twice this year and Japan’s 9- magnitude tremblor in March cut deliveries. China reinstated a 10 percent sales tax and removed trade-in subsidies, while the central bank raised lending rates four times since mid-October to tackle inflation.

“People started to be hesitant about what was happening in terms of the slowdown measures from the central bank and how that will pan out in the economy,” said Ivo Naumann, Shanghai- based managing director at industry researcher AlixPartners.

Total vehicle sales fell 0.25 percent in April to 1.55 million units as sales of commercial vehicles declined, according to the auto group. Commercial-vehicle deliveries dropped 7.8 percent from a year ago to 409,700 units, it said.

‘Continued Softening’

“We will continue to see a continued softening of the demand in segments that benefited from the incentives,” said Bill Russo, a Beijing-based senior adviser at Booz & Co. “I am positive on the long-term outlook as I think the forces driving growth remain strong.”

China last raised retail fuel prices in April after oil advanced to a 30-month high. Auto sales growth in China this year may rise more slowly than the nation’s gross domestic product, Dong Yang, vice chairman of the auto group, said today in a briefing in Beijing. The government target is for 8 percent economic growth this year.

GM China sales fell 5 percent in April as the company sold 203,367 vehicles last month, the Detroit-based company said May 5. BYD Co., the automaker backed by Warren Buffett, reported a 41 percent plunge in March sales.

Honda Motor Co. and Nissan Motor Co.’s China joint ventures may produce 10,000 to 15,000 fewer units last month and output will likely worsen in May as a result of those component shortages, Hung Bin Toh, a Hong Kong-based analyst at Credit Suisse, wrote in an April 15 report, citing a conference call.

Overall auto sales in China surged 32 percent last year to a record 18.1 million, surpassing the U.S. for the second year.

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net

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