General Motors and Volkswagen on Wednesday said their vehicle sales in China fell between 6.5% and 28% last month, underscoring slowing demand in the world’s fourth-largest vehicle market.
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According to Reuters, executives at both carmakers – the leaders in the world’s fastest-growing car market in 2003 – held off from predicting when demand would pick up. But senior industry executives have said the market would rebound only next year.
GM spokeswoman Daphne Zheng reportedly warned that some manufacturers may have been pushing cars to dealers despite slowing demand, in a bid to hit internal sales targets.
“Third-party data suggests that vehicle inventory in China has risen to an alarming level,” she told Reuters, adding GM had not been pressuring dealers. “This is having a short-term impact on our wholesale volume.”
The news agency noted that growth in China’s car market began slowing in the second quarter as Beijing applied the brakes to overheating sectors of the economy, squeezing carmakers’ margins as they cut prices to try and shift cars.
“If government economic tightening measures ease off next year, we should see a return to more healthy growth,” Hu Zhiwei, an executive for Shanghai Volkswagen, the German automaker’s main plant in China, told Reuters, which noted that GM chief executive, Rick Wagoner, last week said he expected the Chinese car market to recover by mid-2005.
The report said that Volkswagen’s two ventures, in Shanghai and the northeastern industrial city of Changchun, saw combined sales slip 11.5% to 47,521 units in October from the previous month – reversing September’s 8.4% month-on-month gain.
The venture between Volkswagen and Shanghai Automotive Industry Corp. (SAIC) sold 21,766 cars in October, down 28% on September. But its venture in Changchun, a tie-up with First Automotive Works, saw October sales climb 9.7% from September to 25,755 cars, helped by price cuts, Reuters said.
GM, the world’s top automaker, told Reuters it sold 6.5% fewer vehicles in October than in September, with 34,476 vehicles rolling out of the country’s showrooms. Sales at its flagship Shanghai GM venture fell 14.4% to 14,350 cars.
GM reportedly added that sales in the first 10 months of this year rose 32.4% to 404,222 vehicles, more than in all of last year. Sales at Shanghai GM rose 34.6% to 212,076 cars.
Reuters noted that, apart from slowing sales, a price war is eroding margins. GM offered 11% discounts in May before Volkswagen countered by cutting prices by up to 11.7% in June.
