Bloomberg News

China Auto Sales Climb 13% as Fear of Restrictions Spur Demand

May 08, 2014

Passenger-vehicle sales in China rose 13 percent last month as consumers brought forward purchases in anticipation more cities will implement ownership restrictions to fight pollution and congestion, according to an industry group.

Retail deliveries of cars, multipurpose and sport-utility vehicles climbed to 1.5 million units in April, the Passenger Car Association said today in a statement. That compares with the 1.56 million median estimate of five analysts surveyed by Bloomberg News.

Six Chinese cities, the latest being Hangzhou in eastern Zhejiang province, have imposed quotas on new license plates to control the growth in vehicle population as worsening smog led Premier Li Keqiang to declare “war” on pollution. More municipalities are considering introducing restrictions, the state-backed China Association of Automobile Manufacturers said last year.

“After Hangzhou imposed restrictions, it stimulated demand as people brought forward purchases,” said Harry Chen, a Shenzhen-based analyst at Guotai Junan Securities Co. “This could be a factor for the next few months.”

Premier Li said in March that fighting air pollution is one of the government’s top priorities. The World Health Organization said the same month that air pollution contributed to 7 million deaths worldwide in 2012 -- with 40 percent of those coming from the region dominated by China under the WHO’s classification system. Outdoor air pollution can cause lung cancer, a WHO agency said last year, ranking it as a carcinogen for the first time.

Panic Buying

Consumers in Nanjing, the capital of eastern Jiangsu province, rushed to buy cars at an auto show on May 1 on concern that the city will introduce purchase limits, China National Radio reported on its website. About one car was sold every three minutes during the exhibition and sales surged by as much as 40 percent in April at some dealerships, according to the state-backed radio station.

A car salesman in the same city was punished for allegedly spreading rumors that Nanjing would be the latest municipality to introduce restrictions on vehicle purchases, the local public security bureau said on its verified weibo account on Sina.com.

Among foreign automakers, Ford Motor (F:US) Co. reported a 29 percent gain in April China sales, led by the Mondeo and Focus. The Dearborn, Michigan-based company is looking to tap into China’s premium segment by introducing two models from its upscale Lincoln brand in the country.

GM, Toyota

General Motors (GM:US) Co., which has pledged to spend $12 billion in China through 2017 to boost production and products, said it increased sales 6.3 percent last month, the slowest pace in 14 months.

The company unveiled the new Chevrolet Cruze model -- its top-selling model for the brand last year -- and the Chevrolet Trax SUV at the Beijing auto show last month.

Toyota Motor Corp. (7203) and Nissan Motor (7201) Co. boosted sales by 12 percent and 15 percent, respectively, contrasting with the 3.6 percent slump at Honda Motor Co., according to the companies.

Great Wall Motor (2333) Co., China’s biggest maker of SUVs, tumbled the most in more than five years in Hong Kong trading today after pushing back sales of its flagship Haval H8 vehicle for the second time this year.

The company, led by billionaire Chairman Wei Jianjun, said yesterday it suspended sales of the H8 after customers reported hearing “knocking noises” in the transmission system when driving at high speeds. Great Wall will hold off on sales of the vehicle until it is able to make the H8 of a “premium standard,” it said, without specifying a date.

Industrywide deliveries in China are forecast to increase as much as 10 percent in 2014, slowing from last year’s 14 percent growth as anti-pollution and austerity campaigns spread, according to CAAM.

To contact Bloomberg News staff for this story: Alexandra Ho in Shanghai at aho113@bloomberg.net; Tian Ying in Beijing at ytian@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net Chua Kong Ho


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