Higher fuel prices, jams slow mainland car sales

PUBLISHED : Wednesday, 18 April, 2012, 12:00am
UPDATED : Wednesday, 18 April, 2012, 12:00am


Mainland car sales dropped 3.4 per cent from a year earlier to 4.8 million units in the first quarter as buyers were deterred by higher fuel prices and traffic jams in some big cities.

Car sales rose 1 per cent last month to 1.84 million units, of which 1.4 million were passenger cars including sedans, SUVs, MPVs and mini vans, the China Association of Automobile Manufacturers said.

'Both the manufacturing and sales of cars in the first quarter were not ideal,' said He Ruide, a director of car research at Beijing's Bayes Consulting.

An array of stimulus measures to boost car purchases ended in December 2010, including tax breaks and government subsidies on fuel-efficient vehicles.

The rush to qualify for the incentives led to increased purchases in the first quarter of last year, said an analyst who asked not to be named.

'Many people rushed to buy at the end of the year but the deals could only be sealed in the first quarter of 2011, resulting in a high base for this year,' he said.

The Beijing Auto Show will be held next week, followed by more events in other cities including Guangzhou. 'The launch of new models will fuel demand and lift market sentiment,' the analyst said.

He expects sales in the second quarter to improve from the first, but 'not by a big margin'.

The government raised fuel prices last month, increasing the benchmark retail price for petrol by 44 fen (54 HK cents) per litre and that for diesel by 51 fen. A litre of petrol now costs more than 8 yuan, the high cost dampening the hopes of many in owning a car.

The analyst expects this year's passenger car sales to grow about 7 per cent, provided there are no new government policies to stimulate or suppress the market.

China is the biggest car market in the world, with 14.5 million passenger vehicles sold last year, an increase of 5.5 per cent from 2010. It was the slowest growth in at least five years. Sales soared 55 per cent in 2009 and 33 per cent in 2010 when the stimulus measures were in force.