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China Auto Sales Slow Down

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Passenger vehicle sales in China slowed down in March compared to the first two months of the year, mainly due to the stricter regulation imposed by the government on vehicle ownership aimed at controlling increasing pollution and traffic congestion in the country. According to the China Association of Automobile Manufacturers (CAAM), passenger vehicle (cars, multipurpose and sport- utility vehicles) sales rose 13.3% to 1.59 million units in March compared with a 19.5% increase in Jan–Feb this year.

Passenger vehicle sales grew 17.2% to 4.42 million units in the first quarter of the year, which is higher than 7.1% growth registered in 2012. Thanks to the steep discounts that kept passenger vehicle sales at a higher level in the world’s biggest auto market. Total vehicle (passenger vehicles, buses and trucks) sales grew 13.2% to 5.4 million units in the first three months of the year compared with 4.3% to 19.3 million vehicles in 2012.

Ford Motor Co. (F - Free Report) and Korea’s Hyundai Motor Co. continued to be the biggest gainers in the month. Ford posted a staggering 65% rise in sales to 81,387 vehicles while Hyundai reported a 26.8% rise in sales to 129,355 units in the month. Considering the first quarter of the year, Ford’s sales went up 54% to 186,000 vehicles while Hyundai’ sales escalated 41.0% to 260,716 units.

General Motors Company (GM - Free Report) and its Chinese joint venture partners sold 290,538 vehicles in the month, up 12.6% from March 2012. It was the company’s second-highest monthly sales ever recorded in China. In the first quarter of the year, GM’s sales increased 9.6% to 816,373 vehicles, overtaking Volkswagen AG (VLKAY - Free Report) , led by burgwhich is higher than 7.1% growth registered in 2012eoning demand for its Buick lineups. Volkswagen reported a 21% rise in sales to 770,000 vehicles in the same period.

Japanese automakers continued to be the losers due to the political conflict between Beijing and Tokyo over disputed islands in the East China Sea. Sales of Japanese brands, including Toyota Motor Corp. (TM - Free Report) , Nissan Motor Co. (NSANY - Free Report) and Honda Motor Co. (HMC - Free Report) , fell 17.8% during the month.

Among the Japanese automakers, Nissan posted the steepest 17% fall in sales to 110,000 cars in March. Meanwhile, Toyota and Honda reported a decline of 12.0% and 6.6% in sales to 61,108 and 75,900 units of passenger vehicles, respectively. Considering the first quarter of the year, sales dipped 15.1% for Nissan, 12.7% for Toyota and 5.2% for Honda.

According to the Chinese government, total vehicle sales in China are expected to rise 7.8% to 20.8 million vehicles in 2013 from 19.3 million last year, led by strong demand for passenger vehicles and economic recovery. The CAAM believes SUVs will remain the fastest- growing segment in the year while commercial vehicles will record a moderate gain in sales.

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