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Trucks, buses lag sales
By Jin Jing |
July 20, 2011, Wednesday
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Print Edition
Print Edition
COMMERCIAL vehicle sales in China slumped last month, continuing as the weakest link in the nation's slowing auto industry. Passenger car sales rebounded, however, after two months of declines.
According to the China Association of Automobile Manufacturers, sales of all vehicles in June rose 1.4 percent from a year earlier to 1.4 million units.
Commercial vehicles in the month fell 12 percent to 326,700 units, while passenger cars rose 6 percent to 1.1 million. For the first half, commercial vehicles sales fell 3.67 percent to 2.2 million units, while passenger car sales increased 5.8 percent to 7.1 million untis.
Sales of commercial vehicles, mainly used for transportation, began skidding as China's economic growth slowed to below last year's 10 .3 percent pace. Gross domestic product in the second quarter expanded 9.5 percent from a year earlier, following growth of 9.7 percent in the first three months of the year.
China central bank has increased the reserve requirement ratio for commercial lenders six times this year to tackle high inflation. That means less lending available for households and businesses.
"Normally commercial vehicle buyers rely on bank loans to fund purchases, and tighter monetary policy undoubtedly has a negative impact on corporate production and consumption," said Dong Yang, secretary general of the associaion.
Su Hui, an analyst with the auto trading market in Beijing, said a slowing economy leads to a worsening environment for small- and medium-sized Chinese businesses, and it also weakens the purchasing power of individuals.
China National Heavy Duty Truck Group Co, known as Sinotruk, had sales growth of only 0.98 percent in the first half of this year while production fell 21 percent.
Beiqi Foton Motor Co Ltd said its first-half sales fell 3.5 percent to 358,000 units. Besides heavy duty trucks, all its other product lines, including light commercial vehicles and minibuses, showed negative growth, with mid-sized buses the biggest decliner at 36 percent.
Zu Guangpin, an analyst from Hongyuan Securities, estimated that demand for commercial vehicle may show signs of recovery in the fourth quarter, when the economy is expected to pick up.
In addition to weak market demand, China's commercial vehicle market is also facing higher emission standards that will force prices up and require more corporate investment in green technologies.
Beginning on July 1, China has banned the production of vehicles that failed to meet the so-called "fourth generation" emission standard, which further lower the emission rate by 30 percent to 50 percent over the national "third generation" standard.
Industrial analysts said about 90 percent of commercial vehicles fail to meet the tougher standard. Most Chinese companies neglected research and development on green technologies, forcing them to rely on foreign technologies for industrial upgrades. That has propelled costs even higher.
Amid this year's slowdown in car sales, the manufacturing association's Yang said Chinese auto makers need to strengthen technology innovation and product development and enhance management expertise and core competitiveness as part of industrial restructuring.
Foton said it has put development of greener vehicles at the top of its priorities. The company recently signed a deal with a Mexican company to sell three hybrid buses that meet tougher European Union emission standards.
Foton also said it plans to invest 1.2 billion yuan (US$185 million) to expand production of new energy vehicles. It aims to sell a combined 225,000 new energy vehicles by 2015, including both passenger and commercial vehicles.
According to the China Association of Automobile Manufacturers, sales of all vehicles in June rose 1.4 percent from a year earlier to 1.4 million units.
Commercial vehicles in the month fell 12 percent to 326,700 units, while passenger cars rose 6 percent to 1.1 million. For the first half, commercial vehicles sales fell 3.67 percent to 2.2 million units, while passenger car sales increased 5.8 percent to 7.1 million untis.
Sales of commercial vehicles, mainly used for transportation, began skidding as China's economic growth slowed to below last year's 10 .3 percent pace. Gross domestic product in the second quarter expanded 9.5 percent from a year earlier, following growth of 9.7 percent in the first three months of the year.
China central bank has increased the reserve requirement ratio for commercial lenders six times this year to tackle high inflation. That means less lending available for households and businesses.
"Normally commercial vehicle buyers rely on bank loans to fund purchases, and tighter monetary policy undoubtedly has a negative impact on corporate production and consumption," said Dong Yang, secretary general of the associaion.
Su Hui, an analyst with the auto trading market in Beijing, said a slowing economy leads to a worsening environment for small- and medium-sized Chinese businesses, and it also weakens the purchasing power of individuals.
China National Heavy Duty Truck Group Co, known as Sinotruk, had sales growth of only 0.98 percent in the first half of this year while production fell 21 percent.
Beiqi Foton Motor Co Ltd said its first-half sales fell 3.5 percent to 358,000 units. Besides heavy duty trucks, all its other product lines, including light commercial vehicles and minibuses, showed negative growth, with mid-sized buses the biggest decliner at 36 percent.
Zu Guangpin, an analyst from Hongyuan Securities, estimated that demand for commercial vehicle may show signs of recovery in the fourth quarter, when the economy is expected to pick up.
In addition to weak market demand, China's commercial vehicle market is also facing higher emission standards that will force prices up and require more corporate investment in green technologies.
Beginning on July 1, China has banned the production of vehicles that failed to meet the so-called "fourth generation" emission standard, which further lower the emission rate by 30 percent to 50 percent over the national "third generation" standard.
Industrial analysts said about 90 percent of commercial vehicles fail to meet the tougher standard. Most Chinese companies neglected research and development on green technologies, forcing them to rely on foreign technologies for industrial upgrades. That has propelled costs even higher.
Amid this year's slowdown in car sales, the manufacturing association's Yang said Chinese auto makers need to strengthen technology innovation and product development and enhance management expertise and core competitiveness as part of industrial restructuring.
Foton said it has put development of greener vehicles at the top of its priorities. The company recently signed a deal with a Mexican company to sell three hybrid buses that meet tougher European Union emission standards.
Foton also said it plans to invest 1.2 billion yuan (US$185 million) to expand production of new energy vehicles. It aims to sell a combined 225,000 new energy vehicles by 2015, including both passenger and commercial vehicles.
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