Chinese Car Sales Grow Slowest in 2 Years

There has been a strong demand for cars in China in the last 2 years. However, this eased last month on the back of surging fuel prices, a major holiday and the end of government subsidies.

The China Association of Automobile Manufacturers revealed on Wednesday that total truck and bus sales fell 33% to 1.27 million compared to January, while passenger car sales fell 37% to 967,200. Altogether, vehicles sales were down 5% from last year, while passengers car sales were up 2.6%, representing the slowest growth in over 2 years.

The group associates this with the week-long Lunar New Year holiday, when car sales often hit a slow point before rising again in the spring. However, the market has been showing signs of slowing after the government ended subsidies for the purchase of small vehicles, while Beijing enacted quotas for those purchased in the city.

Figures from the China Passenger Car Association show similar trends for February sales. Secretary general Rao Da says there was a big impact from policy changes, and they estimate sales will decline at least 2 million this year because of those changes. Auto purchasing power was stretched in the last 2 years and now needs to accumulate again. The incentive policies should have been taken away a long time ago, Rao added.

China Automobile Dealers Association executive Su Hui says that, aside from the usual decline in sales because of extreme winter weather in some places, automakers weren’t quick enough to offer discounts during the holiday. Some customers are waiting for that, Su added, and March will have much better sales.