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China Auto Sales May Decline 10% This Year, Center Says

China’s auto sales may fall 10 percent this year with the end of government stimulus policies and restrictions on car licenses, according to the China Automotive Technology & Research Center.

Industrywide vehicle deliveries fell for the first time in 27 months in April, as the government raised fuel prices, cities implemented controls to curb traffic and Japan’s record earthquake slowed deliveries. Total auto sales declined 0.25 percent to 1.55 million units, according to the China Association of Automobile Manufacturers.

“The exit of government stimulus policies was abrupt, judging from the current effects,” said Zhao Hang, president of the center, which assists the government in formulating auto industry standards and policy research. “The slowdown of auto sales in the first four months was due to the phase-out of government stimulus policies and measures to tackle traffic jams,” he said in an interview in Beijing today.

Zhao’s forecast for industry sales to decline contrasts with a forecast for growth to trail the nation’s gross domestic product by the manufacturers association. The government’s official target is for 8 percent economic growth this year.

State subsidies and buying incentives aimed at boosting consumer demand in the wake of the 2008 global recession helped China overtake the U.S. as the world’s largest vehicle market in 2009.

China’s domestic automakers will be affected more by the slowdown given their products are aimed more at the mid- to low- end market segments, Zhao said. He declined to say what measures should be taken to reverse a decline.

The government may release a development plan for alternative-energy autos soon, he said, without elaborating.

To contact the editor responsible for this story: Kae Inoue at kinoue@bloomberg.net

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