Auto sales growth dips in first quarter
China's auto production and sales volume in the first quarter of 2011 reached 4.9 million and nearly 5 million units, respectively, an increase of only 7.5 percent and 8.1 percent from the same period of last year, according to statistics released by the China Association of Automobile Manufacturers (CAAM) on April 10.
In March, domestic auto production and sales volume both reached roughly 1.8 million units, an increase of more than 5 percent for both from a year earlier.
Auto production and sales volume previously set new highs in March over previous years. However, the growth rate dipped in March and the quarter-on-quarter growth rate also dropped considerably. The overall situation is worse than what was previously expected.
Dong Yang, executive vice chairman and secretary-general of CAAM, said the positive side is that the decline in the growth rate will help enhance resource utilization and benefit the sustainable development of the auto industry. The negative side is that an 8 percent growth rate was much lower than expectations, with an overly sharp decline in the growth rate.
A mainstream research institution estimated in an auto industry development strategy report for 2011 released in the fourth quarter of 2010 that the growth rate would be around 15 percent for passenger car sales volume and around 8 percent for the commercial vehicle sales volume.
CAAM estimated that a growth rate of 10 percent to 15 percent would be appropriate. However, the first-quarter data was lower than the average market expectation, reaching only a half of the expected growth rate.
According to statistics from CAAM, the growth rates of China’s auto output and sales in the first quarter dropped by nearly 70 percent and 64 percent, respectively, from a year earlier.
CAAM cited five main reasons behind the slow growth.
First, the central government canceled the vehicle purchase tax concessions, vehicle subsidy program for the countryside and trade-in car scheme in addition to transforming the country's economic development pattern. Second, fuel prices keep rising. Third, certain cities have limited new vehicle registrations to combat congestion.
Fourth, the domestic haulage vehicle market has become sluggish since the introduction of strict fuel-efficiency standards. Fifth, the earthquake in Japan has had an obvious impact on the Chinese auto market, though it remains to be seen how big the impact will be.
