China Passenger-Vehicle Sales Slow After Deliveries of Minivans Fall 18%

Date:2011-11-10litingting  Text Size:

China passenger-car sales increased at their slowest pace in five months, dragged by shrinking demand for minivans, after the government phased out incentives and raised the cost of borrowing.

Wholesale deliveries, including sport-utility vehicles and minivans, gained 1.4 percent to 1.22 million units last month, the China Association of Automobile Manufacturers said today in a statement. That’s the slowest pace since May, when they dropped 0.1 percent.

Slowing demand in China, the world’s biggest car market, is leading automakers such as General Motors Co. (GM) to deepen incentives following the end of a two-year government stimulus program that helped spur sales 32 percent last year. The auto association, which has cut its market forecast twice this year, expects overall demand growth may not even reach 5 percent in 2011, the slowest pace in 13 years.

“There is a lot less potential for sales growth now, as deliveries were boosted by incentives in the last two years,” said Klaus Paur, Shanghai-based managing director at Synovate Motoresearch. “We’re now in an adjustment period and sales are slowing down. Chinese car manufacturers are the big losers as the segment is extremely price sensitive.”

Vehicle Sales
Among carmakers, General Motors kept its sales lead after October deliveries rose 10 percent to 220,412 units. Sales rose after it began offering discounts in May for low-end minivans made by joint venture SAIC-GM-Wuling. Toyota, Japan’s biggest automaker, sold 82,000 vehicles, up 32 percent, according to Xu Yiming, the company’s Beijing-based spokesman.

Honda Motor Co., Japan’s third-largest carmaker, had a 2.3 percent decline in October sales to 51,826 units, according to Zhu Linjie, the company’s Beijing-based spokesman, on Nov. 7. Ford Motor Co. (F), which sells the Focus compact in China, said it delivered 40,857 units in October, compared with a restated 40,760 units a year earlier.

The slump in demand in China is a contrast to the U.S., where vehicle sales last month rose at their fastest since February, according to estimates from Autodata Corp. Sales were projected to be unchanged from a year ago, according to the median of five analysts surveyed by Bloomberg.

Strikes, Borrowing Costs
In India, monthly passenger vehicle sales tumbled the most in more than a decade after labor strikes idled factories at Maruti Suzuki India Ltd. (MSIL) and rising borrowing costs turned off consumers, according to Society of Indian Automobile Manufacturers figures released today.

Including buses and trucks, total sales in China fell 1.1 percent to 1.52 million units last month, according to the association. In the first 10 months of the year, they’ve increased 3.2 percent, with passenger-car deliveries gaining 5.9 percent to 11.8 million units.

Sales of minivans, used by small businesses in rural areas for transporting goods and people, fell 18 percent. Sedan deliveries rose 2.8 percent, while sales of sport-utility vehicles gained 22 percent, according to the statement.

Sales also slowed as some consumers brought forward purchases before Oct. 1, when subsidies on some energy-efficient vehicles were withdrawn, Zhu Yiping, head of statistics at the auto association, said in Beijing today. Deliveries will likely decline in November and December, she said.

Slowing Growth
The world’s second-largest economy is cooling after the central bank increased interest rates five times between October and July and lifted lenders’ reserve requirements six times this year to stem inflation and slow property-price gains. The measures may be working as October consumer prices rose at the slowest pace in almost three years as the property market cooled.

China may grow 8.5 percent in 2012, the slowest pace in a decade, Li Daokui, an adviser to the central bank, said on Nov. 4. Gross domestic product expanded 10.4 percent last year.

Earlier this week, China’s Passenger Car Association said sales in October fell 4.2 percent from a year earlier to 1.1 million units, as rising oil prices and slowing economic growth hurt consumer sentiment.

“The slowing economy is affecting sales of cargo-moving vehicles,” Dong Yang, deputy head of the auto association, said in Beijing today. “I haven’t seen any clear sign of a turnaround yet.”

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