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China Auto Industry Unlikely to Meet Production & Sales Target for 2008
Dec 09, 2008

The global financial crisis has put a halt on the growth of the Chinese automobile industry in the last quarter of 2008.

Statistics from the China Association of Automobile Manufacturers (CAAM) has shown that China is unlikely to achieve its target of producing and selling10 Million automobiles in 2008, as reported in  huliqnews.

With bleak performance of automobile industry both in terms of production and sales, Chinese automobile industry is not expecting to give good results in the last quarter of 2008.

According to CAAM data, during January to October this year, automobile production grew 11% over last a year ago. However, the growth rate is continually dropping, which reflects a poor outlook for the last quarter performance. Thus, it is expected that the industry will not reach its 10 Million target of production and sales in 2008.

The financial crisis has blocked the industry growth. Financial crisis has eliminated the chances of easy finance availability in the market, thus severely affecting the consumer buying pattern in the domestic as well as in the international market.

In addition to tightened financial market, increased number of automobile manufacturers in China in the past years has resulted in price competition. Thus, reduced market price of automobile reduced their earnings. So, most of the automobile players are finding it difficult to cope up with the financial recession in China. They have started to lay off workers and slashing their forecasts.

Sensing the slowdown in the market, foreign automakers are feeling safe by staying away from injecting fresh investments in China. For instance, Renault, which planned to enter Chinese market has postponed its plans indefinitely. Government policies in this context has proved to be another barrier as vehicle purchase tax at this point of time killed the remaining chance of growth in the domestic automobile market.

Under these kinds of scenarios those are unlikely to change, industry is expecting a further fall in automobile sales both in November and December.

According to an automobile industry expert at RNCOS, “The outlook of the Chinese automobile industry for the last quarter of 2008 does not seem to be bright enough. However, temporary removal of vehicle tax and financial support may help the industry to keep sales in the next year.”

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