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July 11, 2019

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Auto sales slide, drop 9.6% in June on year

China’s auto sales fell 9.6 percent from a year earlier to 2.06 million vehicles in June, the 12th straight monthly decline, according to data released by the China Association of Automobile Manufacturers yesterday.

The association said sales and production in the country’s automobile market in the first six months was below what had been expected at the start of the year. It also said China’s auto sales are expected to decline for the whole year and it urged government policies to promote consumption to be implemented as soon as possible.

Overall auto sales declined 12.4 percent to 12.32 million vehicles in the first half of the year compared with the same period last year, the data showed. But June’s auto sales rebound, up 7.5 percent compared with May.

In January, the association forecast that 2019 sales would be flat at around 28 million. China’s auto market fell 2.8 percent in 2018 from a year earlier to 28.1 million units.

“Market sentiment has not been improved despite sales promotions for some car models. Consumers took a wait-and-see stance when buying vehicles,” the association said. Industry insiders also attributed the sales decline to reasons including macro-economic factors and increased housing costs leaving less money to spend on cars.

Industry analysts earlier estimated that sales in June would be relatively good, driven by sales promotions. Some dealers had promotions to clear out models built with China V emission standards as some regions adopted the stricter China VI standards from July. In addition, some dealers offered promotions in June as they wanted to perform well in the half-year assessment.

However, the association’s data showed that overall auto sales continued to decline in June.

Cui Dongshu, secretary-general of the China Passenger Car Association, said that “after a difficult situation in the first half of this year, carmakers need to adjust their annual sales target. Some manufacturers made promotions in May and June, which leads to a front-loading effect for car sales in the second half.”

Cui said that consumers still hesitate when buying vehicles and car dealers are making adjustments in July. From August, the automobile market will see an improvement, Cui added.

Lin Huaibin, manager of China Light Vehicle Sales Forecast with IHS Markit, said: “Monthly sales volume in June seems to be improving while dealer inventory is also declining. Market could trough out from July onward given the lower sales base in the second half of 2018.

“Trade truce could also provide tailwind although we would still remain cautious as uncertainty may unsettle growth unexpectedly in the short term.”




 

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