Carmakers say export growth to keep slowing

PUBLISHED : Friday, 14 November, 2008, 12:00am
UPDATED : Friday, 14 November, 2008, 12:00am

Mainland vehicle export growth slowed dramatically in the first nine months of the year, and carmakers say they expect conditions in the fourth quarter to be even worse.

Figures from the country's customs bureau showed that 557,500 vehicles were exported during the period, an increase of 34.71 per cent year on year. But that growth rate was 29.3 percentage points down from 64.01 per cent for the first three quarters of last year.

Total value amounted to US$7.6 billion, an increase of 58.39 per cent from last year. But the growth rate had declined 58.45 percentage points from more than 116 per cent.

'Global vehicle demand is certainly slower,' said Geely Automobile Holdings executive director Lawrence Ang Siu-lun. 'But October onwards will be the worst period for vehicle exports because some countries have more restrictions on foreign exchange and export letters of credit', a key element of trade finance.

'Some countries, such as Russia, will stop issuing export letters of credit until there is more confidence in the banking system,' said Mr Ang.

'In addition, the depreciation of the Russian currency will increase the cost of importers, as they usually have to purchase products with US dollars.'

Zhou Shijie, a deputy head of the department of mechanical, electronics and high-technology industries at the Ministry of Commerce, said earlier this week that the mainland's vehicle export growth may slow to 20 per cent this year. That is about a quarter of last year's pace, a reduction caused by the global slowdown that has dampened demand for vehicles in emerging markets.

Exports rose 79 per cent last year, according to the China Association of Automobile Manufacturers.

'The central government's estimate for vehicle exports was still optimistic early in the year because the top export carmakers set aggressive targets,' said Mr Ang.

'But later on, the market drastically slowed and exporters have temporarily scaled back their plans.'

The mainland has already recorded two consecutive monthly declines in vehicle exports for August and September.

Figures from the China Association of Automobile Manufacturers showed that the country's vehicle exports decreased 15.7 per cent in September from a year earlier. The exports dropped 13.77 per cent from August.

Vehicle exports declined 11.29 per cent year on year in August and fell 22.18 per cent from the previous month.

Mainland carmakers are not only facing a tougher overseas market, but also have to struggle through 'a very challenging' domestic market.

'I don't know how long this winter for the car market will last,' Honda president Takeo Fukui said yesterday in Guangzhou.

Honda estimates total vehicle sales, including exports, for the mainland may expand only 5 per cent next year. Industrywide vehicle sales may reach 9.4 million this year, down from the original estimate of 10 million units.