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China’s passenger-car sales had their worst two-month start in seven years as slowing economic growth and record fuel prices discouraged consumers in the world’s largest vehicle market.
Wholesale deliveries of passenger automobiles, including multipurpose and sport-utility vehicles, declined 4.4 percent to 2.37 million units in January and February, the biggest drop since 2005, according to the China Association of Automobile Manufacturers. Sales were projected to fall 3 percent, based on the median estimate of five analysts surveyed by Bloomberg News.
China’s industry minister said car sales may fail to meet this year’s growth forecast after Premier Wen Jiabao this week set the lowest target for economic expansion since 2004. The data is a blow to global carmakers from General Motors Co. (GM) to Volkswagen AG that are already contending with a slump in European sales.
“This is going to be a tough year for China’s automakers,” said Harry Chen, an analyst with Guotai Junan Securities Co. in Shenzhen. “The government is concerned about inflation and economic growth is projected to slow.”
China’s passenger-vehicle sales rose 27 percent from a year earlier to 1.21 million units in February, according to CAAM, matching the median analyst estimate. Vice Secretary-General Xiong Chuanlin said the state-backed group may adjust its growth forecast for 2012 vehicle sales in the coming months.
Economists and analysts typically combine statistics for January and February to remove the distortion caused by the New Year holiday period, which can occur in either month depending on the lunar calendar.
Sales of local-brand cars, excluding minivans, multipurpose vehicles and SUVs, fell 17 percent in the January-February period, according to CAAM data. Their market share dropped 4.2 percentage points to 27.9 percent, the figures show.
So-called dual-purpose vehicles, used for ferrying goods and people, slumped 12 percent to 404,200 units. SUV deliveries climbed 10 percent to 265,300 vehicles in the first two months, bucking the industrywide decline.
Global carmakers are counting on a rebound in China to help drive earnings this year, with auto demand in Europe forecast to decline for a fifth straight year as the sovereign debt crisis unsettles consumers.
GM, the biggest overseas automaker in China, boosted February sales in the country by 30 percent to 240,554 units. Volkswagen’s luxury unit Audi increased sales last month by 66 percent to 31,352 cars.
Automakers will find “big difficulties” delivering as many cars in China as CAAM projected for this year, Minister of Industry and Information Technology Miao Wei told reporters in Beijing yesterday. The state-backed auto association in January predicted passenger-vehicle sales would rise 9.5 percent in 2012.
China raised benchmark gasoline prices on Feb. 8 to a record 9,417 yuan a metric ton, or $4.20 a gallon, according to Bloomberg calculations from government data. American motorists paid $3.72 for a gallon of regular gasoline in the week to Feb. 27, according to data from the Department of Energy.
Premier Wen this week pared the nation’s economic growth target to 7.5 percent from an 8 percent goal in place since 2005, saying that the world’s most populous country needs to shift to a more sustainable and efficient economic model.
“China’s auto market has entered a rational adjustment period,” said Xu Jianyi, chairman of China FAW Group Corp (FAWGRP)., which produces vehicles with General Motors Co., Volkswagen AG (VOW) and Toyota Motor Corp. (7203) in China. “Local automakers need to focus on improving their competitiveness and efficiency,” he said this week at the annual meeting of the legislature.
China will control the increase in auto manufacturing capacity and encourage mergers and reorganizations in the industry, according to Wen’s work report, which sets out the administration’s priorities. The government earlier removed auto manufacturing from the list of industries in which it encourages foreign investment.
The country will also promote new-energy vehicles and encourage the scrapping of old vehicles to reduce pollution, the nation’s top economic planner said in a separate report this week. The government this year exempted buyers of approved alternative-energy cars from an annual vehicle tax, while fuel- efficient cars are eligible for a 50 percent reduction in the levy.
All 412 models approved for purchase by state agencies this year will be limited to Chinese brands, according to a proposal disclosed by the industry ministry. Public consultation on the list closes today.
Foreign brands accounted for nine of the top 10 car models by sales in China last year, led by GM’s Buick Excelle with 253,500 vehicles, followed by the 247,500 VW Lavida cars sold.
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