Mainland car sales fell unexpectedly last month, mainly dragged down by a drop in demand for Japanese cars following the dispute between China and Japan over islands in the East China Sea.
Passenger car sales fell 0.3 per cent year on year to 1.32 million units, the first decline since January, the China Association of Automobile Manufacturers said yesterday.
Total vehicle sales, including commercial vehicles, fell steeper, by 1.8 per cent to 1.6 million units.
The slowdown in economic growth, the rise in fuel prices and the drop in demand for vehicles weighed on sales, a spokesman for the association said yesterday.
"The squeeze on car sales is expected to continue for the rest of the year," he said.
To stimulate sales, Beijing was likely to launch another round of incentives, including subsidies, to encourage people in rural areas to buy small vehicles - those with engines smaller than 1.3 litres - and heavy trucks, the China Securities News reported yesterday.
Shares in Geely Automobile rose 3.9 per cent to HK$3.19 yesterday. Dongfeng Motor jumped 4.9 per cent to HK$9.57.
In the first nine months, mainland vehicle sales, including passenger and commercial vehicles, rose 3.37 per cent year on year to 14.1 million units, while passenger car sales alone rose 7 per cent to 11.26 million units.
Earlier this week, Japanese carmakers including Toyota Motor, Honda Motor and Nissan Motor reported that their sales on the mainland tumbled about 40 per cent year on year last month.
Sales of other overseas carmakers, including BMW and Hyundai, surged.
"The increase in sales among non-Japanese carmakers cannot compensate for the drop in Japanese car brands, because the base of BMW, for example, is relatively smaller," said an analyst who did not want to have his name used.
Owing to declining car sales, the joint venture between First Automobile Works, better known as FAW Group, and Toyota said it would slash production by half this month.
Japanese carmakers had temporarily closed their factories at the height of the dispute.
Toyota, which makes the Prius hybrid, Camry and Lexus luxury models, had planned to sell 1 million vehicles in China this year but is not likely to achieve the target.
Other Japanese brands, such as Nissan and Honda, however, said they had yet to decide on whether to reduce output.
Toyota's sales on the mainland last month plunged 49 per cent from a year earlier to 44,100 units, Nissan's slumped 35 per cent to 76,066, and Honda's dived 41 per cent to 33,931.
Mazda Motor said its sales dropped 35 per cent to the lowest in 19 months. Mitsubishi Motors' sales plunged 63 per cent while Suzuki Motor lost 43 per cent.