Chinese auto sales weaken in January as sales tax rises
Sales in world’s biggest auto market declined 1.1 percent
BEIJING: China’s auto sales shrank in January following a sales tax increase, an industry group reported yesterday. Sales in the world’s biggest auto market declined 1.1 percent from a year earlier to 2.2 million, compared to December’s 9.1 percent expansion, according to the China Association of Automobile Manufacturers. Total vehicle sales, including trucks and buses, rose 0.2 percent from a year ago to 2.5 million.
China’s auto sales rose 15 percent last year after Beijing cut in half a 10 percent sales tax on smallengine vehicles. The government restored part of that reduction in January, raising the tax from 5 percent to 7.5 percent. Demand for SUVs helped to offset weakness in sedan sales. SUV sales rose 10.5 percent in January to 881,000, while sedan sales shrank 3 percent to 1.1 million, according to CAAM. Sales of lower-priced Chinese brand SUVs rose 15.2 percent to 543,000. China’s trade figures can be distorted by the Lunar New Year holiday, which falls at different times in January and February each year. This year, the two-week holiday began Jan. 27, depressing retail activity in January, while last year’s break didn’t begin until Feb. 7. “January was an unusual month with the earlier timing of the Chinese New Year holiday and the impact of the reduced tax incentive,” Ford Motor Co.’s vice president for sales, Peter Fleet, said in a statement last week.
General Motors Co reported earlier that January sales of GM-brand vehicles by the company and its Chinese partners fell 24 percent to 321,264. It blamed the Lunar New Year sales lull. Ford Motor Co said its sales were off 32 percent at 88,432 vehicles. While Nissan Motor Co, the most popular Japanese brand in China, said sales declined 6.2 percent from a year earlier to 119,411 vehicles and Toyota Motor Co said its sales rose 8.1 percent to 101,800.
Steel capacity grows despite pledges
In other news, China increased its steelmaking capacity last year by more than twice Britain’s annual output, a report said Monday, despite repeated pledges to cut huge excess in the sector. China makes more than half the world’s steel but a slowdown in its economy and sagging global demand has left the industry with massive excess capacity. It has been accused of dumping its production on world markets, depressing prices and violating international trade agreements. Throughout 2016, authorities vowed to tackle excess production through consolidation and shutting idle or inefficient factories. But while some steel capacity was cut, this was more than offset by China’s opening of new factories or restarting of idle plants, according to a report by steel consultancy Custeel and Greenpeace East Asia.
It said China’s operating steelmaking capacity increased by 36.5 million tons in 2016 — more than twice as much as the total production capacity of Britain. Eighty percent of this increase occurred in three provinces bordering Beijing, causing air pollution to spike in the capital at the end of the year and early 2017, it added.
Steelmaking is the country’s second largest emitter of air pollution, the report said. Nearly three-quarters of plants affected by China’s capacity cuts in 2016 were already idle. Instead of shutting down firms, local officials maneuvered to “shield zombie steel mills and minimize the impact of the policies” on cutting capacity, said Lauri Myllyvirta, Greenpeace global coal campaigner.
Despite an agreement for Beijing to address steel overcapacity reached at September’s G20 meeting in Hangzhou, China’s trade partners have accused it of dumping the metal on markets in violation of trade rules. Earlier this month the US Department of Commerce imposed hefty tariffs on certain Chinese steel imports, with duties ranging from 63 percent to 190 percent on Chinese exporters accused of selling their products at below fair value or of being unfairly subsidized.
In January the European Union unveiled taxes of between 30.7 percent and 64.9 percent on certain Chinese steel products as it seeks to protect struggling steelmakers in Europe. China must target cuts on operating steel factories and not on idle ones, the Custeel report said, noting that more than 20 million tonnes of new capacity is already due to come online. Factories should be demolished and not sealed up to prevent their reopening in the future, it said. — Agencies