China carmakers see bumpy road ahead after stock crash saps sales
Impact of stock crash on consumer sentiment expected to be greater than originally thought
Carmakers in China may likely reveal a fourth month of contracting sales for July after a stock market crash sapped consumer sentiment.
Many Chinese who put money in the mainland bull market in the first half of this year had to delay expensive purchases like cars, analysts said.
However, a crash from mid-June erased as much as US$4 trillion in share value in under a month. What is left of their money is now locked in stocks as many try to avoid losses.
Sales in the world's biggest car market were already down as the economy grows at its slowest in 25 years. But the crash likely left July sales falling more than June's 2.3 per cent, analysts said.
"Carmakers are biting their nails as they wait to see July sales" and the full impact of the market crash, said a US car executive.
China's car manufacturing body said it more than halved its sales forecast for this year because of the crash's impact on sentiment, while consultancy Automotive Foresight last week demonstrated a correlation between money locked in stocks and falling sales.
Audi sales chief Christian Klingler said last week that China would turn "into a bumpy road in the next few months".
The government took measures to stabilise share prices, but they continue to fluctuate wildly, with last week seeing the steepest single-day fall since 2007.
Analysts expect car sales to continue to be weak at least until stocks stabilise as fear of another tumble clouds consumers' future finances.
Japan's Toyota Motor Corp was due to start reporting season for carmakers in China.
Toyota and compatriots like Honda Motor look likely to lead the pack due to strong sales of sport-utility vehicles as many middle-class Chinese trade up from cars.