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Oil prices to blame for China auto sales slump
The association expects sales in China to keep growing in coming months, but at a slower pace.
This month, forecasting and research firm J.D. Power and Associates lowered its annual sales forecast for the Chinese market to 5.95 million cars and light trucks, an increase of 9.7 percent over 2007, down from its earlier forecast for 15 percent growth.
Monthly sales in China, the world's second-largest auto market, were rising at double-digit rates at the start of the year. But the pace has been slowing for five consecutive months, according to the Chinese automakers' association.
'It's a cyclical downturn,' said analyst David Healy at Burnham Securities. 'You'll still see above-average long-term growth,' compared with other markets.
But growth rates are unlikely to rebound to the levels attained five years ago, when pent-up demand from China's new middle-class consumers outstripped supply.
The impact of a slowdown on Detroit's automakers will be limited, Healy said. 'The contribution (of their Chinese operations) is still fairly small, although it's positive.'
General Motors Corp. is a major player in China, while Ford Motor Co. and Chrysler LLC have a much smaller presence. GM and Ford produce the bulk of what they sell there through ventures with local partners.
In the first six months of 2008, GM's sales in China were up 12.7 percent at 590,126 vehicles, while Ford's sales grew 21 percent to 172,411 vehicles. Overall, auto sales rose 17 percent in the first half of the year to 3.6 million.
In coming months, automakers are likely to see a slump in demand for large models, reflecting not only rising fuel prices but also new taxes aimed at encouraging demand for fuel-efficient cars.
Last week, China's Finance Ministry announced that effective Sept. 1, sales taxes on the biggest vehicles -- those equipped with engines with displacement exceeding 4 liters -- would double to 40 percent.
Cars with 3- to 4-liter engines -- the fastest-growing segment in the market -- will be taxed at a 25 percent rate, up from 15 percent. Cars with 1-liter or smaller engines will be taxed at a 1 percent rate, down from 3 percent.
Chinese authorities have been concerned about pollution since the start of the auto market boom.
Including heavy trucks, 8.8 million vehicles were sold last year in China, and sales are expected to rise in the long term.
Dong Yang, deputy director of the Chinese Association of Automobile Manufacturers, told China's Xinhua news agency that about 100 million households in the country can now afford a car, but only 20 million have bought one.
This month, forecasting and research firm J.D. Power and Associates lowered its annual sales forecast for the Chinese market to 5.95 million cars and light trucks, an increase of 9.7 percent over 2007, down from its earlier forecast for 15 percent growth.
Monthly sales in China, the world's second-largest auto market, were rising at double-digit rates at the start of the year. But the pace has been slowing for five consecutive months, according to the Chinese automakers' association.
'It's a cyclical downturn,' said analyst David Healy at Burnham Securities. 'You'll still see above-average long-term growth,' compared with other markets.
But growth rates are unlikely to rebound to the levels attained five years ago, when pent-up demand from China's new middle-class consumers outstripped supply.
The impact of a slowdown on Detroit's automakers will be limited, Healy said. 'The contribution (of their Chinese operations) is still fairly small, although it's positive.'
General Motors Corp. is a major player in China, while Ford Motor Co. and Chrysler LLC have a much smaller presence. GM and Ford produce the bulk of what they sell there through ventures with local partners.
In the first six months of 2008, GM's sales in China were up 12.7 percent at 590,126 vehicles, while Ford's sales grew 21 percent to 172,411 vehicles. Overall, auto sales rose 17 percent in the first half of the year to 3.6 million.
In coming months, automakers are likely to see a slump in demand for large models, reflecting not only rising fuel prices but also new taxes aimed at encouraging demand for fuel-efficient cars.
Last week, China's Finance Ministry announced that effective Sept. 1, sales taxes on the biggest vehicles -- those equipped with engines with displacement exceeding 4 liters -- would double to 40 percent.
Cars with 3- to 4-liter engines -- the fastest-growing segment in the market -- will be taxed at a 25 percent rate, up from 15 percent. Cars with 1-liter or smaller engines will be taxed at a 1 percent rate, down from 3 percent.
Chinese authorities have been concerned about pollution since the start of the auto market boom.
Including heavy trucks, 8.8 million vehicles were sold last year in China, and sales are expected to rise in the long term.
Dong Yang, deputy director of the Chinese Association of Automobile Manufacturers, told China's Xinhua news agency that about 100 million households in the country can now afford a car, but only 20 million have bought one.
