China Passenger-Car Sales Rise at Slowest Pace in Six Months

Bloomberg Businessweek, December 9, 2011

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China passenger-car sales rose at the slowest pace in six months, as monetary tightening and the removal of government incentives dented demand at Ford Motor Co. and Honda Motor Co.
Wholesale deliveries, including sport-utility vehicles and minivans, gained 0.3 percent to 1.34 million units last month, the China Association of Automobile Manufacturers said today in a statement. That compares with the 0.5 percent median estimate of five analysts surveyed by Bloomberg and is the slowest pace since May, when sales dropped 0.1 percent to 1.04 million cars.
China's vehicle sales have slowed this year from last year's record 32 percent expansion pace as inflation, higher interest rates and the end of a two-year stimulus plan deter purchases. Deliveries for 2011 may climb the least in 13 years, according to the auto industry group, adding to signs China's economy is slowing.
“The market is decelerating and coming down to a more sustainable pattern going forward,” said Bill Russo, a senior adviser at consulting company Booz & Co. in Beijing. Demand is still being affected by consumers pushing forward their purchases to take advantage of government incentives that have since expired and by capital constraints, he said.
CAAM, which has cut its market forecast twice this year, estimates the number of vehicles delivered to Chinese dealerships to rise between 3 percent to 5 percent this year, after surging 32 percent in 2010 on the back of tax breaks and rebates for buyers in rural areas. That would mark the first time the Chinese market would expand at a slower pace than U.S. light-vehicle retail sales, based on CAAM figures stretching back to 1998.
Including buses and trucks, total sales in China fell 2.4 percent to 1.66 million units last month, according to the association. In the first 11 months of the year, they increased 2.6 percent, with passenger-car deliveries up 5.3 percent to 13.1 million units.
Minivans fell 9.5 percent last month in China, leading declines in passenger-car deliveries, according to CAAM numbers. That extends this year's slide to 9.8 percent.