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China Automobile Sales Dipped on Weak consumer Sentiment
Sep 25, 2008

Passenger car sales in China recorded a significant decline of 6.24% in sales for the first time since 2006 owing to economic slowdown and dampened consumer confidence.

According to the official industry association of China, passenger car sales in China slumped in August 2008 for the first time in the past two years, as reported by Reuters.

In August 2008, 451,300 automobiles were sold in China, falling 6.24% as compared to last year. The production in August 2008 also went down 7.1% from August 2007 to 408,305 Units. But in the first eight months of 2008, passenger vehicle sales, apart from exports, rose 13.6% to 4.50 Million units compared to the same period last year (January-August 2007), with production going up 13.7% to touch 4.56 Million units.

The primary reason for the decrease in automobile sales in China can be attributed to the economic slowdown of the nation. Moreover, the recently concluded Beijing Olympics was responsible for disinterest shown by potential automobile purchasers. The dampening buyer sentiment also impacted the Chinese automobile industry sales.

Furthermore, decline in consumer demand contributed to falling automobile industry sales in China. Spiraling fuel costs is one of the main reasons for low consumer demand due to which there has been a considerable reduction in the automobile sales, since people cannot maintain a car at such high fuel prices. Moreover, dwindling stock market is another cause for reduced customer demand. 

The Chinese automobile industry may witness further monthly drop this year. It is forecasted that the industry would register 6 to 8% growth in sales this year over 2007. This indicates to a significant reduction from double-digit rise in past few years. The basis for the forecast is that the nation’s business scenario is not conducive to the Chinese automobile industry.

According to a Research Analyst at RNCOS, “The Chinese automobile industry is declining as both the business and economy are not supporting the industry. This slump will impact the industry due to its diminished contribution to China’s annual GDP. To promote the sales, the automobile manufacturers should produce fuel-efficient and hybrid automobiles as soaring fuel costs are yet another factor behind low automobile sales in the country.”

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