Analysts bullish despite plunge in January sales

PUBLISHED : Wednesday, 15 February, 2012, 12:00am
UPDATED : Wednesday, 15 February, 2012, 12:00am


Analysts are still positive about the outlook for the mainland's car industry despite a 23.8 per cent year-on-year fall in passenger car sales last month to 1.16 million units - the biggest drop in three years.

The China Association of Automobile Manufacturers, the industry body that releases sales figures, said the drop was not indicative of an annual trend as the figure was distorted by the celebration of both the Western new year and Lunar New Year during the month, which left just 17 work days.

The association also attributed the fall to a high-base effect from January last year when car sales hit new highs with buyers rushing to make purchases as government incentives expired.

Global marketing firm JD Power still expects up to 40 per cent of the world's car sales growth this year to come from China. It said the market share held by emerging countries in light passenger vehicle sales, which jumped from less than 20 per cent in 2005 to 51 per cent last year, would continue to grow to more than 55 per cent by 2015, with China and India topping the list.

China's passenger car sector is unlikely to resume the robust growth seen in 2009 and 2010 when tax breaks and government subsidies boosted sales to unprecedented growth of 55 per cent and 33 per cent respectively, according to Marvin Zhu, an analyst with LMC Automotive. But he expected light vehicle sales in China to jump 9 per cent this year to 19.7 million, compared with growth of 5.5 per cent last year.

Analysts warned that 2012 would be a year of transition for the mainland car industry, during which sustainability would replace quantity as the focus of development for the future. For example, a new tax waiver would be provided for electric cars and light vehicles with engines sized below 2,000cc.

Volkswagen China chief executive Karl-Thomas Neumann said in Beijing yesterday that the company would begin mass production of electric vehicles in 2018.