Chinese car sales rose at their slowest pace in 19 months in
September amid a weakened economy and rising inventories.
For foreign automobile makers, which increasingly have counted
on consumers in the world's largest car market to offset weakness
elsewhere, the slowdown in economic growth adds to pressures that
include increased regulatory scrutiny.
China's passenger-car sales last month rose 6.4% from a year
earlier to about 1.7 million vehicles, according to data released
on Monday by the China Association of Automobile Manufacturers, a
government-backed industry group. Growth in total sales of
automobiles including passenger and commercial vehicles slowed to a
2.5% increase from a 20% gain a year earlier.
September's passenger-car sales performance was the weakest
since sales fell in February 2013, a month when China's weeklong
Spring Festival holiday closed car lots. Industry analysts said the
latest results were below expectations for a traditionally strong
month. Car makers and dealers usually boost marketing efforts in
September to attract consumers ahead of the weeklong National Day
holiday that started Oct. 1.
Foreign auto makers, as a whole, have overcome the industry's
slower growth by taking market share from Chinese brands. On
Monday, CAAM said foreign auto makers again increased their share
of the Chinese passenger vehicle market, to 62.4% in the first
three quarters of the year from 60% in the year-ago period.
But now smaller sales gains are being notched by foreign auto
makers as well. Volkswagen AG's China sales in September rose 6.7%
from a year earlier, compared with an 11% increase for August. One
of Toyota Motor Corp.'s Chinese joint ventures, FAW Toyota Motor
Co., slashed its sales target by 6% this year, citing a sluggish
economy and high inventory at dealers.
On Monday, Credit Suisse cut its price target for BMW AG shares
in part because it said the German car maker's China sales were
weaker than expected. Sales of BMW and Mini brands in China rose
less than 4% in September to about 37,111 cars, the report said.
BMW, which said it doesn't comment on outside estimates, said it is
confident it will hit moderate sales growth by the end of the
year.
"The economic situation has had a spillover effect on the car
industry, especially in midsize cities with a population of about
five million, where economies are facing greater downward
pressure," said Peng Bo, a consultant with Strategy&. He
expects China's passenger car sales to rise up as much as 10% this
year, compared with a 16% gain in 2013.
Jessica Zhu, a 34-year-old Shanghai bank credit manager, is
putting off a car purchase. She figures it is too expensive and
troublesome to own a car. "Driving in big cities like Shanghai is
not that pleasant," she said. "Parking is getting more expensive
and difficult. You will also have to worry about maintenance issues
from time to time."
Fang Yongbin, 36, who works in the publishing industry, echoed
those concerns. "On top of the one-off car-purchasing cost, you
should spend at least 20,000 yuan ($3,300) a year to maintain a
car. That is too expensive," he said. "Since public transportation
has significantly improved in Shanghai, I don't think it is
necessary to own a car."
According to the China Automobile Dealers Association, a trade
group, inventories at dealers stood at about 45 days in September,
up from 36 days in the year-earlier period. Luo Lei, an executive
at CADA, said the inventories of imported cars were running at
about two months because demand for such cars slowed as growth has
weakened.
At a briefing in Beijing on Monday, Yao Jie, a CAAM deputy
secretary-general, said an index measuring the prosperity of the
auto industry fell 3.4 percentage points in the third quarter from
the second quarter. "Inventories are continuing to increase," he
said, without disclosing further details.
China remains a stronger growth engine than the U.S. and Europe,
and continues to be a source of strength for many car makers.
General Motors Co.'s sales in China rose 15% last month compared
with a year earlier. Ford Motor Co.'s car sales fell 4% in
September from a year ago, the auto maker's first monthly drop in
more than two years, but analysts attributed that decline to
capacity constraints.
China's first-quarter economic growth came in at 7.4% compared
with a year earlier, its slowest pace in 18 months. Second-quarter
growth rose slightly to 7.5%, but measures of trade, property
prices and manufacturing activity suggest momentum slipped in the
third quarter.
Ye Sheng, an analyst at market research firm Ipsos, said
pressure from Beijing could be contributing to weakening sales.
A number of foreign auto makers have faced scrutiny from
antitrust regulators over their business practices with dealers as
well as their pricing of spare parts and services. Mr. Ye said that
could affect the car association's sales figures because they
measure wholesale deliveries to dealers, not retail figures.
"Auto makers had usually pressed dealers to take more orders
than they needed. But such pressure on dealers has eased due to the
antitrust move," he said.
China in September levied a combined $45.8 million fine against
local affiliates of Volkswagen's Audi AG arm and Chrysler, owned by
Fiat Chrysler Automobiles NV, after alleging they manipulated
prices of vehicles and parts.
Other auto makers that have been the subject of antitrust
investigations include BMW, Daimler AG and Tata Motors Ltd.'s
Jaguar Land Rover unit. The companies have said they were
cooperating with the probes.
-- Rose Yu and Lilian Lin contributed to this article.
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