Rough ride for China carmakers

BEIJING: China’s automobile sales fell 13.9% in November from a year earlier, the country’s top auto industry association said, marking the steepest such drop in nearly seven years in the world’s largest auto market.

The drop in sales to 2.55 million vehicles, a fifth straight decline in monthly numbers, comes against a backdrop of slowing economic growth and a crippling China-US trade war.

It was the steepest decline since January 2012, when the timing of the Lunar New Year holiday hurt auto sales.

The November drop comes on the heels of almost 12% declines in each of the past two months, putting China on track for an annual sales contraction not seen since at least 1990.

Sales totalled 25.4 million vehicles in the first 11 months of the year, down 1.7% from the same period a year earlier, data from the China Association of Automobile Manufacturers (CAAM) showed.

The industry body did not immediately give a reason for the sales drop in November, but has cited the impact of a sluggish economy and the trade war with the United States.

Reuters reported in October that China’s car dealers, hit hard by the slowdown, were pushing Beijing to prop up the sector, including a proposal that authorities cut the purchase tax on some smaller cars by 50%.

China’s powerful state planning agency poured cold water on the industry’s request and said the slowdown could weed out weaker players in the market.

The downtrend in sales shows how international carmakers, from General Motors to Toyota Motor, are in for a rough ride at a time when they are increasingly looking towards the top auto market as a driver of growth.

China’s car market is also a major employer, driver of economic growth and a barometer of consumers’ willingness to buy big-ticket items.

China’s auto market grew 3% last year, according to CAAM data, but was still sharply down from a 13.7% gain in 2016 that was aided by a purchase tax cut on smaller cars.

Sales of new-energy vehicles – a category comprising electric battery cars and plug-in electric hybrid vehicles – remained robust, up 37.6% in November, though slowed from a month earlier. — Reuters

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