China's Car Sales Weaken for Second Consecutive Month

As demand in the fast-growing market was hit by global economic weakness, China's passenger vehicle sales shrank for the second consecutive month in September, the China Association of Automobile Manufacturers said on October 10.

Sales of the cars, including sedans, multi-purpose vehicles and sports utility vehicles, fell 1.4% in September year on year to 552,800 units. Sales of passenger vehicles in the first nine months of the year rose 11.4% to 5.1 million units, according to the China Association of Automobile Manufacturers.

The decline in September followed a 6.2% drop in August, the first monthly drop since early 2005, which suggested a decline in the market after years of double digit sales growth.

The latest figures followed weaker sales figures for the January to September period from two major automakers, a bad omen for global players who had hoped China would cushion shrinking demand in developed markets.

Volkswagen said this week it sold 772,783 units in China for the nine-month period, up 13.1% from the 683,012 units sold a year earlier. Volkswagen's sales rose about 30% in the same period last year.

Ford Motor said its sales in the first nine months of the year rose 7.1% from a year earlier to 240,879 units. Total sales of Ford's wholly owned brands in China were up 30% in the same period a year earlier.

Analysts said the worse is yet to come as the economic slowdown deterred car purchases and China is no exception. "While the global automotive industry is clearly experiencing a slowdown in 2008, the global market in 2009 may experience an outright collapse, said Jeff Schuster, analyst with US research firm J.D. Power and Associates. "While mature markets are being impacted more severely than emerging markets, no country or region is completely immune to the turmoil," Schuster said.

China's automotive market is expected to reach 8.9 million units in 2008, an increase of 9.7% from 2007. However, that estimated growth rate is less than half the 24.1% growth seen in 2007, according to the research firm.