Mainland car sales hit as rebates end

The world's biggest car market has shifted gears from overdrive into reverse, with mainland passenger car sales declining last month for the first time in two years.

Mainland carmakers' shipments of passenger cars to dealers edged down 0.11 per cent last month from a year earlier to 1.04 million units, official data released yesterday by the China Association of Automobile Manufacturers showed.

Supply chain disruptions caused by Japan's March 11 earthquake and tsunami continued to lead to mainland production stoppages at firms such as Honda and Toyota last month. That compounded the effect of weak demand earlier in the year because of the January 1 expiration of tax rebates and other government incentives for car buyers.

Last month saw the first year-on-year decline in passenger car shipments since January 2009, and followed two years of stimulus-driven demand that saw the mainland market overtake the United States as the world's largest by sales volume.

Sales of all passenger cars rose 6.14 per cent in the first five months of the year to 6.03 million units, according to the association. By segment, SUV sales continued to lead with a 29.6 per cent increase from a year earlier in the January-May period. Sales of minivans rose 13.4 per cent while car sales grew 7.1 per cent. Sales of crossover-type vehicles declined 8 per cent during the period.

Sales of all vehicle types, including heavy duty trucks and other commercial vehicles, fell 3.98 per cent last month to 1.38 million units. Commercial vehicle sales have been hit hard by the expiration of a government programme to replace old and inefficient trucks with newer ones, and fell 14.18 per cent last month.

The end of government stimulus measures - including tax cuts, subsidies and rebates - has weighed heavily on car sales, which have also been hit by strict caps on new vehicle licences targeted to ease traffic jams in cities such as Beijing.

The sales figures also reflect the second month of supply chain disruptions following the disaster in Japan, which analysts say will pose challenges for some suppliers and carmakers until at least autumn.