China Expects Auto Sales Growth To Keep Slowing This Year

Chinese vehicle sales are likely to keep on slowing down this year and the growth seen early this decade will probably never return, state media said Sunday, citing a leading industry analyst. Total vehicle sales are likely to rise by about 12% this year to 5.8 million, Xinhua news agency reported, quoting Xu Changming of the government think-tank the State Information Center.

The "blow-out growth" of 2002 and 2003, when waves of newly affluent Chinese acquired their first car, will not come again, Xu said. Twelve percent growth would be welcome news in most countries' auto markets, but in China, it is down from 15.5% in 2004 and 34.2 % in 2003, according to previously released data.

The threat of lackluster sales has forced some companies to start cutting prices. Luxury carmaker Bayerische Motoren Werke AG (BMW) saw China sales fall 16 % in 2004 from 2003 and has reportedly slashed the price of five domestically made sedans by up to 100,000 yuan ($12,000 dollars) per vehicle. The trend for lower prices is reinforced by China's drive to cut tariff barriers to implement promises made in order to enter the World Trade Organization (WTO). In less than 18 months, Chinese auto tariffs will have fallen to 25 %, compared with up to 100% when China became a WTO member in December 2001.

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