China’s monthly vehicle sales post first back-to-back drop since 2015

BEIJING: Chinese auto sales edged down 0.1% from a year ago in May, registering two consecutive months of declines for the first time since 2015, as the rollback of a government tax incentive dragged on demand.

China auto sales fell to 2.1 million vehicles in May, the China Association of Automobile Manufacturers (CAAM) said. In April, sales dropped 2.2%, the steepest fall in 20 months.

In the first five months of 2017, sales grew 3.7% from year-ago levels, the association said at a briefing in Beijing.

This was smaller than the 7% growth seen over January-May 2016 and also trails CAAM’s forecast for 5% growth this year.

China’s auto market, the world’s largest, recorded a 13.7% growth in sales last year after the government halved the purchase tax on vehicles with engines of 1.6 litres or below to 5% to stimulate demand.

The tax climbed to 7.5% this year and will rise to the normal 10% next year.

“Last year was just too strong and now the policy impact is fading away,” said Yale Zhang, managing director of Shanghai-based consultancy Automotive Foresight.

“The growth (last year) overdrew some of the demand.”

Sedan sales fell 9.3% year-on-year in May, with sport-utility vehicles proving to be the lone bright spot for passenger vehicles, growing by 13.5% as Chinese continue to trade up to larger vehicles.

Foreign brands that are strong in the small sedan segment have seen sales slow this year, with General Motors Co, Ford Motor Co and Volkswagen AG all recording lower sales in the first five months of the year.

Meanwhile, commercial vehicles posted rapid growth, led by lorry sales that grew 18.3%, which are usually linked to the strength of the overall economy. — Reuters