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China - Nature Hit Auto Sales Hard in H1 2008
Sep 15, 2008

Automobile sales in China grew at snail pace during the first half of 2008 owing to earthquake that hit Southwest China, extreme weather conditions, and rising fuel prices.

The China Association of Automobile Manufacturers (CAAM) said that the auto industry sales in the country slipped down by 5.19% to 3.61 Million passenger cars in the first six months of 2008 from the same period a year ago, as reported by
AFP.

The association further revealed that the industry sales in June 2008 surged by an annual growth of 13% to 517,469 Units but this was the third month in a row when rising sales graph took reverse turn. Moreover, both sedan and Multipurpose Vehicle (MPV) sales grew by 16.72% to 2.67 Million and 4.09% to 111,400 Units respectively. But Sports Utility Vehicles (SUVs) showed the impressive performance with 42% increase to 224,300 Units during the first half of 2008.

According to the industry analysts, decline in automobile sales is a result of soaring fuel prices that has reduced the automobile demand sharply in the country. Moreover, the downfall in the Chinese stock market, which has dropped around 50% since the destructive earthquake hit the Southwest China and extreme climatic conditions that jammed roads and hit the supplies of auto parts in 2008, were also responsible for weak auto demand.

Besides, the government’s macroeconomic control policies to contain inflation and tackling unemployment have negatively impacted the automobile sales.

The industry analysts have forecasted that the current sales trend will continue in future and vehicles demand remain sluggish due to a sharp rise in fuel prices. Moreover, the economy of China is growing at a slow pace resulting in fall in wages and rise in material prices which together affected the automobile industry drastically.

According to a Research Analyst at
RNCOS, “The sales recorded by the Chinese automobile industry dropped significantly in H1 2008 amid bade weather conditions, earthquake and soaring oil prices. However, the current situation could change in future provided automobile manufacturers launch new fuel-efficient models, or that run on alternative fuels, like hybrids, to encourage the demand for automobiles.”

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