China Auto Sales Fall for First Time in 2 Years

1.55 million units were sold in April

China's auto sales dipped 0.25% in April in their first on-year fall in more than two years, data showed on May 10, as the market's explosive growth showed its clearest sign yet of cooling. A total of 1.55 million units were sold in the country -- the world's top auto market -- last month, the China Association of Automobile Manufacturers (CAAM) said.

The fall prompted CAAM secretary general Dong Yang to warn that auto sales -- forecast to see 10%-15% growth this year -- could in fact grow slower than China's economy as a whole, which is projected to expand by 7%.

April's figure represented the first year-on-year decline since January 2009, when the nation's vehicle sales dropped 14.4% year on year to 735,500 units due to the impact of the global financial crisis.

Sales in April were also down 15.1% from the previous month.

Sales rose 5.95% in the first four months of 2011 from the same period a year earlier to 6.53 million units, much slower than the growth rate of more than 32% in the full year of 2010.

The sales slump could in part be attributed to supply chain disruptions caused by the March earthquake and tsunami in Japan in March, Dong told a news conference in Beijing. "We still can't get detailed reports from Japan about the parts disruption, so we need more time to estimate the earthquake's impact on China's auto industry." "But we did get reports from all Japan car makers about their production suspension in China." Toyota has said it was reducing production at its Chinese plants by 50%-70% until June 3 due to parts shortages, and Honda suspended production for half of May at some of its China plants, citing "routine checks."

Japanese automakers' share of the China market fell 3.07% in April from a year earlier while the share held by other international car makers increased, said CAAM deputy secretary general Zhu Yiping. However, analysts said the market slowdown was mostly due to Beijing cutting off incentives that have been boosting sales.

Sales growth has slowed since mid-2010 as the government began withdrawing stimulus measures aimed at cushioning the impact of the worldwide economic downturn. The government has raised purchase taxes on small passenger cars to 10% starting this year, ending an incentive that helped the nation overtake the United States as the world's top auto market in 2009.

The only remaining incentive -- a 3,000 yuan (US$460) cash subsidy on certain small-engine cars -- will likely end in June, which will add to the pressure on sales, said Zhang Xin, auto analyst at Guotai Junan Securities.

Some cities including Beijing have also introduced measures such as annual quotas on the number of new car license plates to rein in buying as part of efforts to ease chronic gridlock and air pollution.

Copyright Agence France-Presse, 2011

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