China's Car Industry May be Shifting into Slow Lane

After growth of 22% in 2007, this year the market is likely to expand by only 7%-9%.

China's car manufacturing sector has been used to racing ahead at sometimes dangerous-looking speeds but now it may have to get used to life in the slow lane, at least for a while.

After growth of 22% in 2007 and 25% in 2006, the car manufacturing sector this year is likely to expand by only 7%-9%, according to various estimates based on figures for the first nine months.

In the first nine months of the year, Ford Motor China reported little more than 7% in vehicle sales, while passenger car sales were up by a mere 6%.
Volkswagen China did slightly better, reporting a sales increase of 13.1% in the same period, according to data that also included Hong Kong and Macao business. As late as April, Volkswagen opened a new plant, in the east Chinese city of Nanjing, "to respond to growing demand."

Honda Motor has seen sales rise by 19.7% this year but, significantly, for the month of September alone, sales were up by just 3.5%.

Price is a major concern in China, where inflation has been high in recent months, argued Jia Xinguang, an analyst with consultancy China National Automobile Consulting and Developing Corp. "The price of various products have increased, while income levels have remained the same, so consumers have to consider the money needed for car maintenance, especially for lower and middle income families," he said.

Copyright Agence France-Presse, 2008

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