A man stands outside a car in Hong Kong gridlock Chris McGrath, Getty Images

Car Sales Drop in China after Economic, Market Woes

Chinese equities have lost more than $3.5 trillion in value since last month and the country's GDP has slowed to its weakest rate in almost a quarter of a century.

BEIJING — Passenger vehicle sales in China fell in June as slowing growth in the world’s second-largest economy and plunging share prices dampened consumer demand, an industry group said Wednesday.

Sales of sedans, multi-purpose vehicles (MPVs), sport utility vehicles (SUVs) and minivans declined 3.2% in June from a year ago to 1.43 million units, the China Passenger Car Association (CPCA) said.

The decrease was “a result of the stock market (coming off) the peak compounded with the slowdown in economic (growth),” the CPCA said in a statement posted on Chinese news portal Sohu’s auto channel.

Chinese equities have lost around $3.5 trillion in value in a rout that began last month, according to Bloomberg News, a huge sum by any standards.

“The stock market turmoil has led more people to put off their plan to buy new cars,” the CPCA said, adding that dealers complained that some customers who had put down deposits had become “unwilling” or “did not have the cash” to pay the balance of their purchase.

Downward pressures on the broader Chinese economy had also affected the auto market as industrial companies’ profit growth slowed, it said.

“All organizations’ car buying enthusiasm is waning,” it said, adding that sales in the first six months rose 8.4% year-on-year to 9.89 million units.

China’s economy is in the grip of a slowdown as Chinese leaders try to engineer a transformation of the country’s expansion model whereby consumer demand becomes the main driver rather than investment.

GDP growth slowed to 7.4% in 2014, the weakest rate in 24 years. In the first quarter, it eased further to 7.0%, a post-global financial crisis low.

Many economists expect the expansion might have decelerated further in the second quarter on weakening investment and subdued domestic demand, despite Beijing taking stimulus measures to bolster growth.

Copyright Agence France-Presse, 2015

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