Stimulus policy rumors slow down sales of passenger cars
By Lu Nengneng |
July 7, 2012, Saturday
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Print Edition
Print Edition
PASSENGER car sales in China grew slower than expected last month as consumers adopted a wait-and-watch attitude amid mounting speculation that more stimulus policies are on the way to subsidize vehicle purchases.
Sales of sedans, sport-utility vehicles, multi-purpose vehicles and minivans rose 12.4 percent year on year to 1.15 million units in June, a moderate slowdown from the 16.6 percent increase in May, the China Passenger Car Association said yesterday.
June's sales uptick came following the announcement of a slew of government-led incentive programs since May, including a 6 billion yuan (US$952 million) fund to finance nationwide purchase of vehicles with an engine capacity of 1.6 liters or less and a 6 percent subsidy on the sales price of small displacement cars and mini-buses for rural buyers in southwest China's Chongqing City.
The moves by the central and local governments fanned speculation that more stimulus measures are in the pipeline to rev up China's auto sales, which hit rock bottom in the first quarter of this year. Rao Da, secretary-general of the association, said rumors about renewal of several nationwide car sales incentive programs, including a trade-in scheme, a subsidy package for rural consumers and a rebate on vehicle purchase taxes, may have forced customers to put off some buying decisions last month.
Ye Sheng, auto research director at market research firm IPSOS, said China is unlikely to see the same kind of aggressive stimulus moves as in 2009 since such enticements won't make much of an impact on a large-scale car market which now delivers about 20 million units each year.
Zhang Yu, managing director of consultancy Automotive Foresight, said incentives can disrupt the pace of auto manufacturing, which requires careful planning according to market expectations.
"When a stimulus suddenly unleashes market demand, automakers often find themselves in an under-supply situation. But when the incentives expire, the expanded production facilities become idle," Zhang said.
A total of 7 million passenger vehicles were sold in the first six months of this year, up 6 percent from the same period of last year. The production of cars rose 11.6 percent in June to 1.23 million units, bringing this year's cumulative supply surplus to 532,609 units from 447,440 units by May.
Sales of sedans, sport-utility vehicles, multi-purpose vehicles and minivans rose 12.4 percent year on year to 1.15 million units in June, a moderate slowdown from the 16.6 percent increase in May, the China Passenger Car Association said yesterday.
June's sales uptick came following the announcement of a slew of government-led incentive programs since May, including a 6 billion yuan (US$952 million) fund to finance nationwide purchase of vehicles with an engine capacity of 1.6 liters or less and a 6 percent subsidy on the sales price of small displacement cars and mini-buses for rural buyers in southwest China's Chongqing City.
The moves by the central and local governments fanned speculation that more stimulus measures are in the pipeline to rev up China's auto sales, which hit rock bottom in the first quarter of this year. Rao Da, secretary-general of the association, said rumors about renewal of several nationwide car sales incentive programs, including a trade-in scheme, a subsidy package for rural consumers and a rebate on vehicle purchase taxes, may have forced customers to put off some buying decisions last month.
Ye Sheng, auto research director at market research firm IPSOS, said China is unlikely to see the same kind of aggressive stimulus moves as in 2009 since such enticements won't make much of an impact on a large-scale car market which now delivers about 20 million units each year.
Zhang Yu, managing director of consultancy Automotive Foresight, said incentives can disrupt the pace of auto manufacturing, which requires careful planning according to market expectations.
"When a stimulus suddenly unleashes market demand, automakers often find themselves in an under-supply situation. But when the incentives expire, the expanded production facilities become idle," Zhang said.
A total of 7 million passenger vehicles were sold in the first six months of this year, up 6 percent from the same period of last year. The production of cars rose 11.6 percent in June to 1.23 million units, bringing this year's cumulative supply surplus to 532,609 units from 447,440 units by May.
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