China’s auto sales sank for a fourth month last month as an unexpectedly painful slump in the global industry’s biggest market intensified.
Purchases of sports utility vehicles (SUVs), sedans and minivans contracted 13 percent from a year earlier to just more than 2 million units, the China Association of Auto Manufacturers reported on Friday.
Auto demand had been forecast to weaken after Beijing clamped down on bank lending late last year to cool a debt boom, but the slump is sharper than expected, prompting expectations regulators might try to prop up sales with tax cuts or other incentives.
Sales for the 10 months through last month fell 1 percent from a year earlier to 19.3 million vehicles, well below forecasts of growth in mid-single digits after last year’s anemic 1.4 percent expansion.
The slowdown is a “normal correction” following years of rising auto ownership levels, said Zhang Xin (張欣), an independent industry analyst.
“The bad overall environment has played the biggest role,” including a cooling economy and restrictions imposed by Chinese cities on car ownership to curb congestion and smog, Zhang said.
If economic conditions sour, “people will cut expenses by not buying a car,” he said.
China is a top market for General Motors Co (GM), Volkswagen AG (VW) and other industry majors that look to increasingly prosperous Chinese customers to drive revenue growth.
They face rising competition from young, but ambitious, Chinese rivals.
Total vehicle sales, including trucks and buses, shrank 11.7 percent last month to 2.4 million. For the year to date, they were off 0.1 percent at 22.9 million.
Last month’s decline was worse than September’s 12 percent contraction.
VW, which vies with GM for the status of China’s most popular brand, said sales declined 9.8 percent to 274,000. Sales for the first 10 months of the year were up 0.4 percent at 2.5 million.
The association gave no details of purchases of SUVs, the industry’s profit engine, but said year-to-date sales growth slowed to 1.6 percent last month from September’s 3.9 percent.
Chinese domestic brands that had been expanding their market share with lower-cost SUVs and sedans suffered an even bigger decline last month.
Sales contracted by 18 percent from a year earlier to 852,000 vehicles. Sales of Chinese-brand SUVs sank 21.8 percent to 498,000.
Year-to-date sales were off 3.6 percent at just under 8.1 million. Their total market share shrank 2.5 percentage points to 41.6 percent.
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