China Auto Prices Rise Most in at Least Four Years (Update2)
March 11, 2010, 12:53 AM EST(Adds analyst’s comment in sixth paragraph.)
March 11 (Bloomberg) -- China’s vehicle prices rose the most in at least four years in February as consumers took advantage of government incentives to buy new cars and trucks, contributing to a 16-month-high rate of inflation.
Automobile prices climbed 1.49 percent last month from a year earlier, Cheng Xiaodong, an official with the National Development and Reform Commission’s vehicle monitoring division, said in a telephone interview today in Beijing. China’s consumer prices rose 2.7 percent, the national statistics bureau said, adding pressure on the government to pare stimulus measures.
China’s vehicle sales jumped 46 percent in February from a year earlier to 1.21 million, as automobile demand continued to surge after the government extended subsidies to customers trading in old vehicles and for rural car buyers. Prices may moderate as sales growth slows, Cheng said.
“Vehicle prices may stabilize or face downside pressure after the first quarter,” he said. “Some dealers are no longer charging extra for consumers who want vehicles on an earlier date, like they did in the past months.”
Passenger-vehicle prices, which exclude trucks and buses, rose 0.36 percent in February from a year earlier and were unchanged from January, Cheng said.
‘Prices Will Come Down’
“The price increase is temporary,” said Ricon Xia, an analyst at Daiwa Institute of Research in Hong Kong. “Automakers’ production has been catching up with sales, and vehicle prices will come down.”
BYD Co., China’s fastest-growing automaker last year, rose 2.7 percent to HK$68.20 as of the mid-day trading break in Hong Kong. Geely Automobile Holdings Ltd., the traded unit of Zhejiang Geely Holding Group Co., gained 2.5 percent to HK$4.11.
The government last year halved the sales tax on new vehicles to 5 percent and offered a total of 5 billion yuan ($732 million) in cash to customers who trade in old vehicles, insulating the country from slumping global demand. The subsidies helped China overtake the U.S. as the world’s biggest auto market for the first time in 2009.
China announced plans on Dec. 10 to scale back the measures, which included increasing the tax on new vehicles with engines of 1.6 liters or smaller to 7.5 percent.
Premier Wen Jiabao aims to hold the nation’s full-year inflation around 3 percent after banks flooded the financial system with money to drive a rebound amid the global recession. Gross domestic product grew 10.7 percent last quarter and central bank Governor Zhou Xiaochuan said March 6 that anti- crisis policies, including the yuan’s peg to the dollar, must end “sooner or later.”
--Tian Ying. Editors: Terje Langeland, Ian Rowley
To contact the editors responsible for this story: Kae Inoue at kinoue@bloomberg.net
