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Low Consumer Confidence Hit China?s Auto Makers
Dec 29, 2008

Chinese auto sales tumbled 14.6% in November 2008 with weak consumer confidence under pressure from global economic turmoil.

As consumer confidence further weakened under reeling pressure of economic meltdown, auto sales in China slumped 14.6% year on year in November 2008, said China Association of Automobile Manufacturers (CAAM), as reported by
afp.

Chinese automakers sold 685,100 vehicles during November 2008, representing a decline of 4.3% against October 2008. The commercial vehicle segment posted the sharpest monthly decline of 26% in November 2008. But the overall vehicle sales in the first eleven months of 2008 surged 8.5% to 8.6 Million units against the same period last year. Apart from this, the Chinese automobile sales increased 8.4% on year in the month of October 2008 due to the heavy discounts given by car makers in the wake of single digit drop in Aug-Sep 2008.

The fall in the Chinese auto sales during November 2008 was primarily resulted from decreasing disposable income of auto buyers owing to the sluggish real estate and capital markets and spike in oil price across the globe.

Besides the pressure from high fuel prices and economic slowdown, other factors have had impact on new car sales in China; consequently, the Consumer Price Index eroded the prices of food and fuel before making proclamation about the economy.

In this times of economic turmoil, Chinese auto makers are demanding reductions in taxes to raise their bottom lines so that they can concentrate on manufacturing more environment-friendly vehicles as the Chinese car market is still far from reaching saturation.

As per a Research Analyst at
RNCOS, “Auto manufacturers in China are expected to continue to experience weak sales in H1 2009 primarily because of dampened consumer confidence and slowdown in exports to emerging markets. Moreover, the scenario of operating margins and industry organic growth for 2009 is expected to remain low due to sharp fall in sales volume, high price competition and deterioration of product mix.

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