China, the world’s fastest growing passenger car market, saw sales slow in May as falling stock prices eroded wealth and consumer prices rose, according to the country’s Automotive Technology & Research Centre.
Sales of cars, SUVs and MPVs vehicles rose 25% from a year earlier to 885,800 last month, compared with 34% growth in April, according to the centre.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Analysts told Bloomberg News that sharp increases in vehicle sales last year would be difficult to maintain because of a “diminishing wealth effect” along with high petrol prices. They predicted that vehicle sales may even decline from year-earlier levels in the second half of 2010.
China’s passenger car sales have risen every month since February 2009 after the government halved the consumption tax on small vehicles to 5% the preceding month. The tax was increased to 7.5% this year.
Monthly passenger car sales growth slowed in April to the most sluggish pace since March 2009, according to the manufacturers association, as China’s consumer prices rose 2.8% from a year earlier.
There are also fears of a price war caused by rising inventories at dealers and manufacturers. China’s total stockpile of vehicles rose by 64,900 units in May from April, according to the centre.
China’s vehicle sales are forecast to rise 17% this year to 16m and carmakers continue to invest in the country.
Honda aims to increase production there by 28% to 830,000 vehicles a year by the second half of 2012 and Nissan plans to boost local capacity to 900,000 vehicles a year in the same timescale.
Volkswagen and partner China FAW Group plan to invest (US$1.2bn) to build a plant in the city of Foshan in southern Guangdong province, according to the city government.
Total vehicle sales, including buses and trucks, increased 29.7% last month to 1.19m and vehicle exports rose 54.9% year on year in the first four months of 2010 to 149,800. Total imports rose 174.6% to 255,500.
