Auto sales in China slump a third month

BEIJING — China’s auto sales declined in August for a third month, but some brands had gains following a market downturn that shook the global industry.

Sales of sedans, SUVs and minivans fell 3.4 per cent from a year earlier to 1.4 million vehicles, according to an industry group, the China Association of Automobile Manufacturers.

That dragged down the growth rate for the first eight months of the year to 2.6 per cent following declines of 6.6 per cent in July and 3.4 per cent in June.

China’s auto market has been cooling since growth peaked at 45 per cent in 2009, but this year’s plunge prompted analysts to cut growth forecasts and General Motors and Volkswagen AG to reduce prices.

The deceleration is especially wrenching for global brands that are looking to China, the biggest global auto market by number of vehicles sold, to drive future revenue.

With the Chinese economy cooling, buyers are putting off purchases, said analyst Xu Qian of AlixPartners, a research firm. He said automakers will be lucky if the market achieves single-digit growth this year. “If the overall economy keeps struggling, we might not even see growth but a decline,” said Xu.

Sales also have been dented by measures imposed by Beijing, Shanghai and other major cities to curb smog and congestion by limiting new vehicle registrations.

Total vehicle sales, including trucks and buses, declined three per cent from a year ago to 1.7 million, according to CAAM.

Sales of SUVs, a bright spot for the industry, soared 45.6 per cent to 453,000, the group said. Meanwhile, sales of more traditional sedans slumped 16.4 per cent to 762,000 vehicles.

Despite the slowdown, automakers are pushing ahead with multibilliondollar plans to expand production and create models to suit Chinese tastes, adding to competition in a crowded market.

In July, GM announced a $5-billion plan to create vehicles with its main Chinese partner to be sold in China, Brazil, India and Mexico. That came after Ford and a local partner in April committed to spend $1.1 billion on an additional factory in China.

Companies were preparing for slower growth, but the squeeze hit faster than many expected.

In a report last week, research firm Bernstein said China’s downturn is so severe that German automakers, heavily reliant on this market, are likely to issue profit warnings in coming weeks.