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.
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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.
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By GlobalDataChina’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.
