(MENAFN – AFP) China’s auto sales fell year-on-year in June, an industry group said Friday, as a slowing economy and rollercoaster stocks hit demand in the world’s largest vehicle market. That compares with a 1.2% year-over-year rise recorded in May and a 3.7% increase in April. Stripping out the holiday factor, the last time China’s vehicle market posted a decline was in September 2012, when a territorial dispute between Beijing and Tokyo over a group of uninhabited islands in the East China Sea hit demand for Japanese cars.
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Overall auto production fell 0.22 percent to 1.85 million vehicles in June, according to CAAM, while that for passenger cars declined 0.72 percent to 1.59 million.
“The stock market has some impact on auto sales as it hurts cash flow and less people visited 4S (dealership) stores”, CAAM chief Dong Yang told reporters.
Chinese automakers such as Great Wall, the market leader in the SUV segment, cut prices twice last month, a sign of weak underlying sales, according to Sanford C. Bernstein & Co. “Our surveys of dealers show that visiting volumes to vehicle showrooms dropped sharply in the first-half”, said Mr. Dong.
“The plunging stock market is essentially a meat grinder, shredding money meant for buying cars”, commented Cui Dongshu, secretary-general of the China Passenger auto Association in an interview with Bloomberg, recently. Analysts predict the automotive downturn to continue into the second half of 2015 due in part to the free-falling stock market. The Shanghai Composite is now off almost a quarter from its mid-June high, though stocks have staged a recovery over the past two days thanks to government intervention. Hyundai Motor Co.is building two more plants in China by next year, while Renault SA has a factory set to open in the first half of next year. Sales growth in Toyota Motor Corp. fell slightly to 10% from 12% over the same period.
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Price cuts by both foreign and local brands in the past months have done little to spur demand.
