Car sales seen to surge but dealers may spark price war
By Pan Xiaoyi |
September 8, 2010, Wednesday
|
Print Edition
Print Edition
SALES of passenger cars in China may continue to rebound for the rest of this year because government subsidies are set to encourage purchases, industry analysts said.
But they also warned that Chinese auto dealers may spark a price war toward the end of this year because they are likely to face pressure on their capital.
The market saw combined sales of autos, including sedans, sport-utility vehicles and multi-purpose vehicles, at 856,269 units last month, an increase of 21.6 percent from a year earlier, China Passenger Car Association said yesterday at a media briefing.
The sales marked the first time they grew positively on a monthly basis in five months, although they underperformed the general auto market, the world's largest with the combined sales of passenger cars and commercial autos rising nearly 56 percent annually in August to 1.21 million units.
"The momentum could continue through September, the traditional prime season, due to subsidies on fuel-efficient autos that were available from mid August and will take effect gradually," said Yang Zaishun, deputy secretary general of the association.
The central government last month announced it would offer subsidies of up to 3,000 yuan (US$443) to encourage the purchase of fuel-efficient vehicles.
Usually more sales occur at the year-end because consumers are eager to purchase autos on speculation that the incentives may be adjusted amid the central government's determination to rein in liquidity.
However, the expected sales boom may not be as sparkling as those of last year and car dealers may have to reduce prices, said Su Hui, an auto analyst with China Automobile Dealers Association.
"Most dealers are feeling the pressure in capital as the result of higher stockpile with slowing sales," said Su. "They may offer bigger price discounts to further boost sales."
In the first eight months of this year, passenger car sales jumped 34.2 percent to 8.23 million units.
Sales have lost steam after peaking in March as the effects from lower purchase taxes and subsidies on small engines waned.
But they also warned that Chinese auto dealers may spark a price war toward the end of this year because they are likely to face pressure on their capital.
The market saw combined sales of autos, including sedans, sport-utility vehicles and multi-purpose vehicles, at 856,269 units last month, an increase of 21.6 percent from a year earlier, China Passenger Car Association said yesterday at a media briefing.
The sales marked the first time they grew positively on a monthly basis in five months, although they underperformed the general auto market, the world's largest with the combined sales of passenger cars and commercial autos rising nearly 56 percent annually in August to 1.21 million units.
"The momentum could continue through September, the traditional prime season, due to subsidies on fuel-efficient autos that were available from mid August and will take effect gradually," said Yang Zaishun, deputy secretary general of the association.
The central government last month announced it would offer subsidies of up to 3,000 yuan (US$443) to encourage the purchase of fuel-efficient vehicles.
Usually more sales occur at the year-end because consumers are eager to purchase autos on speculation that the incentives may be adjusted amid the central government's determination to rein in liquidity.
However, the expected sales boom may not be as sparkling as those of last year and car dealers may have to reduce prices, said Su Hui, an auto analyst with China Automobile Dealers Association.
"Most dealers are feeling the pressure in capital as the result of higher stockpile with slowing sales," said Su. "They may offer bigger price discounts to further boost sales."
In the first eight months of this year, passenger car sales jumped 34.2 percent to 8.23 million units.
Sales have lost steam after peaking in March as the effects from lower purchase taxes and subsidies on small engines waned.
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