China Car Sales Rise Sharply in September
October 12 2016 - 7:00AM
Dow Jones News
SHANGHAI—Government tax breaks and dealer discounts helped fuel
a 29% jump in China car sales last month for the biggest gain since
January 2013.
Foreign and domestic auto makers shipped 2.27 million
cars—including sedans, crossovers and minivans—to dealers last
month, the China Association of Automobile Manufacturers said
Wednesday, up from 1.75 million in September 2015.
So far this year, China's new-car sales are at 16.75 million
vehicles, a 15% increase from the same period a year earlier.
The sharp uptick in September car sales reflects just how weak
the market was a year ago.
In response to four straight months of slow sales, China's
central government in October 2015 halved the 10% purchase tax on
vehicles with 1.6-liter engines or smaller.
Sales have since rebounded strongly. More than 70% of cars sold
in China qualify for the incentive, which helps consumers save up
to 10,000 yuan, or about $1,500, when buying a new vehicle.
The tax break is scheduled to expire Dec. 31, as car dealers
aren't shy about reminding customers.
In one of Shanghai's major automobile marketplaces, dealers had
all posted countdown timers in their showrooms. "Don't hesitate.
Time is running out," Zhu Huisheng, a dealer selling General Motors
Co.'s Buick brand told customers. He offered a 10% discount for
Buick Envision crossover.
Nationwide, new cars were sold at less than 90% of their tag
prices in September, according to Ways Consulting Co., a local
consultancy focused on the Chinese automotive industry. The
discount levels have barely changed in the past four months, Ways
said.
Sales have outstripped market expectations. In January, the auto
manufacturers' group predicted a 7.8% rise for this year, while IHS
Automotive put its estimate at 9.5%. Both are sticking with those
numbers, given the prospect for a slow fourth quarter.
"We expect the growth will drop to single-digit rates in the
fourth quarter. If Beijing doesn't extend the tax break, we are
afraid the growth will be zero next year," said Lin Huaibin, an
analyst at IHS.
Crossovers remained the brightest spot in the month. More than
879,000 sport-utility vehicles and crossovers combined were sold in
China, 54% more than a year earlier, according to the
manufacturers' group.
Analysts said growing affluence and increasing awareness of
leisure time and its value would keep driving consumers to shift to
big cars such as crossovers.
Thanks to increasing demand for cars, dealers maintained their
inventories at healthy levels, said the China Automobile Dealers
Association, a government-backed trade group. Nationwide, the
average inventory at dealerships was equivalent to 36 days of sales
in August, and an initial examination of more than 20,000 dealers
showed that unsold cars dropped further in September, the
association said. Anything above 45 days is considered unhealthy
for dealers.
Overall sales of passenger and commercial vehicles increased by
26% in September from a year earlier, to 2.56 million. Year to
date, sales of passenger and commercial vehicles combined grew 13%
to 19.36 million vehicles.
Rose Yu and Lilian Lin
(END) Dow Jones Newswires
October 12, 2016 06:45 ET (10:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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