China's June Car Sales Growth Slows to 10.9% as Government Tightens Credit

China’s passenger-car sales growth slowed in June as inflation accelerated, reducing consumers’ spending power in the world’s largest auto market.

Sales of cars, sport-utility vehicles and multipurpose vehicles rose 10.9 percent from a year earlier to 839,228 last month, the China Automotive Technology & Research Center said today. That compares with 34 percent growth in April and 25 percent in May, according to the center.

China’s inflation rate accelerated in May to an annual 3.1 percent, the quickest in 19 months. Measures to slow the economy may weigh on auto sales after government stimulus measures boosted demand to a record last year, Tim Dunne, an analyst at J.D. Power and Associates, wrote in a June 29 report.

“The government will continue its tightening measures to cool down the economy in the second half of the year,” Dunne said. “We therefore expect vehicle sales to slow to a more sustainable pace following what has largely been incentive- driven strong growth.”

China’s economy expanded 11.9 percent in the first quarter. China International Capital Corp. has said it expects growth to slow to 7.5 percent by the fourth quarter.

June’s increase in passenger-vehicle sales is the slowest since the research center began publishing monthly data in April. Passenger-car sales expanded 25.6 percent to 5.42 million, it said.

Government Incentives

The China Association of Automobile Manufacturers will publish separate June sales data later this month. Passenger- vehicle sales in June 2009 rose 48 percent from a year earlier, it reported at the time.

According to the association’s data, monthly sales have risen more than 10.9 percent for 14 straight months through May.

China’s vehicle deliveries may rise 17 percent this year to 16 million, and annual demand for automobiles may eventually exceed 30 million, according to the State Information Center.

Total vehicle sales, which include buses and trucks, increased 14 percent last month to 1.13 million, the research center said today. They rose 30.5 percent in the first half of the year to 7.19 million.

China continued to lead the U.S. in total sales in the first half, with U.S. deliveries rising to 5.6 million during the period.

Production Disrupted

Production in China at Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., Japan’s three largest carmakers, was disrupted in June as workers at Denso Corp. and other component suppliers in the country went on strike for higher wages.

At least eight strikes since the middle of May forced suppliers to Toyota, Honda and Nissan in China to raise wages, raising carmakers’ costs.

Automakers continue to invest in China. SAIC Motor Corp., the nation’s largest, said June 25 it aims to raise as much as 10 billion yuan ($1.48 billion) in a private share placement to fund expansion.

The carmaker plans to sell 180,000 of its own-brand vehicles this year, President Chen Hong said in March. That compares with an overall sales target of 3 million for all SAIC- made vehicles.

--Tian Ying. Editors: Ian Rowley, Terje Langeland

To contact Bloomberg News staff for this story: Tian Ying in Beijing at +86-10-6649-7571 or ytian@bloomberg.net

• Tweet
• More
  • Business Exchange
  • Buzz up!
  • Digg
• Print
• Email