Vehicle sales in China increased by 12.5% year on year in April. According to the China Association of Automobile Manufacturers (CAAM), 1.28m sedans, SUVs, MPVs and minivans were sold last month compared to 1.14m in April 2011. For the January-April period, deliveries rose 1.9% to 5.05m.
The reported sales growth so far in 2012 is far below CAAM’s projection of 9.5%. The slow growth has been attributed to slowing of China’s economy and higher fuel prices.
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Auto demand is expected to remain solid in May and June as new models, launched at the Beijing show, are expected to hit the market, according to industry observers. After June, the growth pattern is expected to follow a softened pattern which was experienced after the end of Beijing’s policy incentives, Reuters reported.
Industry executives expect the market to see single digit growth rates for a consecutive second year. General Motors has pegged growth between 5-10%.
Kevin Wale, head of GM’s China operations, said he was “actually bullish about the back half of the year.”
“Some people are holding off buying [but showroom traffic is] still very strong [in the market]. When traffic is strong, that means there’s underlying demand. The economy is still okay, the government is loosening credit, making money available for people,” Wale told Reuters.
According to Dave Schoch, head of Ford Motor China operations, the market is headed for stable and sustainable growth, following the ups and downs since the late 1990s.
Schoch said: “There may be monthly ebbs and flows of the total Chinese auto market but we see sustained positive momentum and growth of about 5% per year for the foreseeable future. Today’s 18.5m market is expected by many to be around 30m by 2020.”
China’s auto market grew 5.2% in 2011 compared to 33% in 2010 and 53% in 2009. The slowing rate of growth is due to various reasons including the end of tax benefits for purchasing small cars and government measures – such as vehicle licence plate rationing – to reduce congestion in the largest cities.
