China’s vehicle sales show modest growth

China’s total motor sales in the first half of the year, including passenger and commercial vehicles, showed a modest 2.9% increase from the first half of last year, prompting the China Association of Automobile Manufacturers (CAAM) to warn against more sales restrictions on cars. The modest increase provides evidence that economic growth in the country is slowing. Significantly, foreign automakers continue to report healthy sales growth in the world’s largest auto market, suggesting that China’s local auto brands continue to bear the brunt of the economic slowdown. General Motors Co. said its sales for the first half rose by 11% to 1.42 million vehicles; while Volkswagen AD sold 982,600 vehicles, also an increase of 11%. Two years ago, Chinese brands had a 31% share in the total passenger vehicle sales; during the first half of 2012, the market share had fallen to 26%. Local brands are now facing stiff competition from the less expensive cars offered by foreign automakers. Yao Jie, CAAM vice secretary-general, said that vehicle sales could slow down further if other cities follow the vehicle restriction policies implemented by Beijing and Guangzhou to ease traffic. Dong Yang, the association’s secretary-general, suggested that instead of limiting vehicle purchases, local governments levy consumption taxes on autos and collect the revenue. The association expects 5% to 8% growth in total auto sales this year, as stimulus measures such as government investment projects support commercial auto sales. At the beginning of the year, CAAM forecast an 8% to 10% growth in vehicle sales. China’s vehicle sales rose by 2.5% last year, prompting automakers to slash prices and offer discounts. (July 12, 2012)