July car sales hit five month low

End-2016 rush hits 2017 sta­tis­tics, but CAAM main­tains tar­gets, Li Fusheng re­ports.

China Daily (Hong Kong) - - MOTORING -

China sold 1.97 mil­lion cars in July, a five-month low, and the sit­u­a­tion is not ex­pected to im­prove soon, ac­cord­ing to the coun­try’s lead­ing in­dus­try as­so­ci­a­tion.

July sales were up 6.2 per­cent from the same month last year, ac­cord­ing to the China As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers.

This brought sales in the first seven months of the year to 15.32 mil­lion ve­hi­cles: 4.1 per­cent growth year-on-year, which is 5.7 per­cent­age points lower than the same pe­riod last year.

The as­so­ci­a­tion pre­dicted that growth in the third quar­ter will be even slower than in pre­vi­ous pe­ri­ods. An­a­lysts said that would make it hard for China’s car sales to achieve the as­so­ci­a­tion’s growth goal of 5 per­cent for the year.

The CAAM has not ad­justed its es­ti­mate, but Ye Shengji, the as­so­ci­a­tion’s deputy sec­re­tary­gen­eral, has toned down its op­ti­mism, say­ing a growth rate from 3 per­cent to 5 per­cent would be rea­son­able.

“China’s car sec­tor is yet to reach its peak, so it is nor­mal to see some fluc­tu­a­tions as it evolves,” said Ye.

“As you know, be­cause of the fa­vor­able pur­chase tax, the mar­ket grew 14 per­cent year-on-year in 2016, and the ab­nor­mally high growth has had some ef­fect on the per­for­mance this year.”

The pol­icy was in­tro­duced in late 2015, aim­ing to boost car sales by halv­ing the pur­chase tax on cars with en­gines at or be­low 1.6 liters. Be­fore it ex­pired by the end of last year, the pol­icy was be­lieved to have en­cour­aged mil­lions of peo­ple to speed up their pur­chases, with a large pro­por­tion seen in the sec­ond half of 2016.

That means it would be tough for car deal­ers in com­ing months to catch up, let alone ex­ceed their sales in the same pe­riod last year.

Con­sult­ing firm LMC Au­to­mo­tive Shang­hai es­ti­mated that China’s car mar­ket would strug­gle to see a growth rate of 2 per­cent this year.

Sales of pas­sen­ger cars — which ac­counted for the ab­so­lute ma­jor­ity of car sales in the coun­try — stood at 1.67 mil­lion ve­hi­cles in July, also a five-month low. In the first seven months of the year, sales to­taled 12.93 mil­lion, 2 per­cent growth year-on-year. Even this mea­ger growth was im­pos­si­ble with­out soar­ing SUV sales, which have not changed since the start of the year. Sta­tis­tics from the CAAM show that from Jan­uary to July, 5.21 mil­lion SUVs were sold, a 17 per­cent rise year-on-year.

All other seg­ments sedans, mul­ti­pur­pose ve­hi­cles and mini­vans saw sales fall, rang­ing from 2.8 per­cent to 26.3 per­cent.

Some good news is that many or­ga­ni­za­tions, in­clud­ing in­vest­ment bank Jef­feries, ex­pect SUVs to con­tinue their growth trend for a while.

Jef­feries’ sta­tis­tics show that in the first half of the year SUVs ac­counted for 40.2 per­cent of pas­sen­ger car sales in China, while in the US they (in­clud­ing pick-ups) con­sti­tuted 61.9 per­cent of the to­tal.

Com­pared with pas­sen­ger cars, com­mer­cial cars are an­other story al­to­gether. In July nearly 300,000 such cars were sold, soar­ing 18.4 per­cent year-on-year.

This brought Jan­uary to July sales up to 2.39 mil­lion ve­hi­cles, 17.5 per­cent growth from the same pe­riod last year.

New en­ergy cars are the fastest-grow­ing seg­ment so far. Some 56,000 such ve­hi­cles were sold in July, a 55 per­cent surge from the same month 2016. Chen Shi­hua, an as­sis­tant to the CAAM’s sec­re­tary­gen­eral, said it was the high­est growth seen this year.

From Jan­uary to July, 250,000 new en­ergy cars were sold, up 21.5 per­cent year-onyear. The CAAM es­ti­mated new en­ergy car sales could hit 700,000 ve­hi­cles this year. De­spite a wide gap, the or­ga­ni­za­tion has not re­vised its es­ti­mate.

Xu Haidong, an­other as­sis­tant to the or­ga­ni­za­tion’s sec­re­tary-gen­eral, said the tar­get is within reach be­cause sales usu­ally grow faster in the lat­ter half of the year, a pat­tern that was seen in the past two years.

Con­tact the writer at li­fusheng@chi­nadaily.com.cn

China’s car sec­tor is yet to reach its peak, so it is nor­mal to see some fluc­tu­a­tions as it evolves.”

deputy sec­re­tary­gen­eral of the China As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers

WU HE / FOR CHINA DAILY

Work­ers check cars at Chi­nese au­tomaker Ch­ery’s pro­duc­tion line in Wuhu, An­hui province.

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