Growth in mainland car sales hits brakes after 2 years racing away

PUBLISHED : Thursday, 10 March, 2011, 12:00am
UPDATED : Thursday, 10 March, 2011, 12:00am


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After two years of stimulus-fuelled, double-digit increases, growth of car sales on the mainland slowed to a crawl last month.

Carmakers shipped 967,200 passenger cars to dealers last month, a 2.6 per cent increase from a year earlier and the slowest rate of sales growth since January 2009, according to data released by the official China Association of Automobile Manufacturers.

Last month's sales were down 37 per cent from January's 1.53 million units. The fall-off reflects the expiration of a number of government car purchase rebates and subsidies that expired at the end of last year, as well as the impact of a seasonal slowdown over the Lunar New Year holidays last month.

Shanghai GM remained the biggest manufacturer of passenger cars by sales, with 71,500 units shipped last month, down 41 per cent from January. Second-place Shanghai Volkswagen shipped 67,100 cars, down 31 per cent from January, while FAW-Volkswagen shipped 40,800 cars, a decrease of 58 per cent from the previous month.

By passenger car type, sales of sedans rose 1.7 per cent from a year earlier to 633,600 units last month. Sales of crossover type vehicles fell 11.3 per cent to 199,000 units, sales of sport utility vehicles rose 49.5 per cent to 105,200 units and sales of multi-purpose vehicles including minivans rose 16.5 per cent to 29,400 units.

Pre-Lunar New Year buying probably helped January's sales figures and hurt February's, as many mainlanders like to purchase new cars ahead of the week-long holiday in order to show off to family and friends.

Moreover, a backlog of orders from December as buyers rushed to beat the end of various buying incentives also contributed to January's stronger sales growth. But filling of back-orders appears to have trailed off dramatically last month.

Analysts are awaiting this month's sales figures for a clearer picture underlying demand following the end of the stimulus measures.

A host of tax cuts, rebates and subsidies that Beijing put in place throughout the financial crisis ended on January 1 this year. Those measures included a reduction in the 10 per cent purchase tax for cars with engines smaller than 1.6 litres, a 'cash for clunkers' programme offering rebates to replace old vehicles, and a 'cars for the countryside' scheme subsidising car buyers in rural areas.

But one key policy remains in place - a nationwide 3,000 yuan (HK$3,555) subsidy for purchases of cars with engines of 1.6 litres or smaller was introduced in July of last year and continues to help boost demand for fuel-sipping models.