Higher prices at the pump and a slowing economy are being blamed for the sluggish increase in new car sales in China last month. During the first quarter, new car sales declined 1.3 percent. The slump could well continue into the current quarter but some analysts predict that new model launches, planned for after the Beijing auto show, will bolster sales.
Greater China at industry consultancy Ipsos associate research director Sheng Ye says, “March was never a very good month for car sales. Now that the government cut the GDP target and raised fuel prices, you can imagine the psychological impact that could have on people who are thinking about buying cars.”
Hoping to move China’s economy to a more balanced pattern of growth, Premier Wen Jiabao last month lowered the 2012 GDP growth target to 7.5 percent – its lowest level since 1999.
Beijing has also raised gasoline prices twice in the past six weeks to a level about 25 percent higher than the average price per gallon in the U.S. Although affluent Chinese appear undaunted by the increases, middle- and lower middle-class Chinese are apparently delaying purchasing new vehicles.
According to the China Association of Automobile Manufacturers (CAAM), 1.4 million sedans, minivans, SUVs and multipurpose vehicles were sold in China in March, compared with 1.16 million in January and 1.21 million in February.
Deliveries during the first quarter of 2012 totaled 3.77 million units compared with 3.84 million units sold during the first quarter of 2011.
Light vehicle sales in the U.S. rose by approximately 13 percent in March. Japan and South Korea also reported brisk sales during the month.
CAAM has not revised its full-year auto sales forecast of eight percent growth. The organization’s secretary general Dong Yang said, “Given the situation in the first quarter, I think chances that we will see growth for the full year are bigger than a decline.”
Automotive consultancy firm LMC Automotive Company lowered its growth forecast from 10.9 percent down to nine percent after Premier Wen revised the government’s forecast.
LMC’s Asia Pacific chief John Zeng said, “Our previous forecast was based on GDP growth of 8.5 percent. A one percentage point change is going to have a fairly big impact on car sales. For the overall vehicle market, the growth rate this year would certainly be lower than 9 percent as commercial vehicles have been declining since 2011.” LMC’s forecast does not include minivan sales.
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