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China Auto Industry Posted Slowest Growth Rate of 14% in Apr ?08
Jun 09, 2008

The Chinese automobile industry experienced the slowest growth rate of 14% in April 2008 in two years due to change in people’s attitude and rising energy prices.

The China Association of Automobile Manufacturers (CAAM) said that in April 2008, the automobile sales surged at the slowest rate of 14% in almost two years, as reported by

CAAM also disclosed that the Chinese automobile industry sale grew 21% in the first quarter of 2008. In April, 922,600 Units of vehicles (both commercial and passenger) were sold, but the passenger car segment witnessed its slowest growth rate of 11% in the month.

The industry experts accredited inflation for lesser demand of vehicles, particularly passenger cars, in China during April 2008. Inflation took the prices of food and other essential commodities up, making people to expend extra on them and stay away from buying expensive and luxury items such as passenger cars.

Bearish movement in the Chinese stock market is also responsible for decline in the automobile industry as it sucked the consumers spending. Looming uncertainty over the Chinese stock market is preventing customers from investing in the automobile companies. Moreover, in the backdrop of economic uncertainty, spiraling oil prices and cost factors have brought fundamental changes in their buying sentiments. Under such conditions, Chinese people are refraining themselves from making an expensive purchase that could offset their budget, ultimately building pressure on auto players.

Zhou Xiao, Governor, Chinese Central Bank, said on May 5, 2008 that the interest rates could rise in coming months, as reported by on May 12, 2008. Besides, rising energy prices, spiraling cost of raw material and cut-throat competition among automobile manufacturers are posing the biggest challenges before the Chinese automobile industry. Another chief factor hampering the sales of the automobile industry is possible interest rate hike.

According to a Research Analyst at
RNCOS, “The Chinese automobile industry is going through tough time as the vehicle sales have gone down on account of rising inflation, energy and fuel prices, and possible interest rate hikes. In such a scenario, manufacturers and auto dealers should offer lucrative policies such as easy access to loan with flexible repayment schemes as consumers need affordable price vehicles along with attractive designs.”

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