Auto sales in China fell for the first time in five months and passenger-car deliveries tumbled the most in more than a decade in India after authorities in both countries raised borrowing costs to tame inflation.
Deliveries of passenger and commercial vehicles in the world’s largest automobile market fell 1.1 percent to 1.52 million in October, led by the 18 percent drop in minivan sales, the China Association of Automobile Manufacturers said yesterday. In India, passenger-vehicle sales tumbled 24 percent to 138,521, the biggest drop since December 2000, according to the Society of Indian Automobile Manufacturers.
China’s central bank has increased interest rates five times since October last year, while the Reserve Bank of India has raised borrowing costs 13 times since March 2010 to cool consumer prices. That’s contributed to the auto associations in both countries cutting their annual forecasts twice in 2011 at a time when the International Monetary Fund is warning the global economy may face a “lost decade.”
“Europe is going through a crisis and the U.S. is still not out of the woods so if India and China slow down, it’s a likely global crisis,” said Rakesh Batra, head of Ernst & Young’s automobile practice in India. “There is negative sentiment caused by global events and it’s causing customers to hold back purchases.”
In China, General Motors Co. (GM) kept its sales lead after October deliveries rose 10 percent to 220,412 units. Sales rose after it began offering discounts in May for low-end minivans made by joint venture SAIC-GM-Wuling. Toyota Motor Corp. (7203), Japan’s biggest automaker, sold 82,000 vehicles, up 32 percent, according to Xu Yiming, the company’s Beijing-based spokesman.
Industry sales of minivans, used by small businesses in rural areas for transporting goods and people, fell 18 percent to 171,700 units after the government phased out incentives following the end of a two-year stimulus program. Sedan deliveries gained 2.8 percent, while sport-utility vehicle sales climbed 22 percent, according to China’s auto association.
“The slowing economy is affecting sales of cargo-moving vehicles,” Dong Yang, deputy head of the association, said in Beijing yesterday. “I haven’t seen any clear sign of a turnaround yet.”
Deliveries also slowed last month as some consumers brought forward purchases before Oct. 1, when subsidies on some energy- efficient vehicles were withdrawn, according to the industry group, which expects overall demand growth may not even reach 5 percent in 2011, the slowest pace in 13 years. Sales are likely to decline in November and December, the group said.
India’s overall vehicle sales including trucks and motorcycles declined 1.1 percent to 1.44 million in October from 1.46 million a year earlier, the first monthly decline since January 2009, according to the country’s auto industry group.
Sales were hampered by strikes at Maruti Suzuki India Ltd. (MSIL), the biggest producer in Asia’s third-largest car market, which estimates the stoppages cost the company more than 40,000 units in lost production last month. The industry group, which has cut its forecast for nationwide car sales twice this year, expects annual sales to increase at the slowest pace in three years.
“With high interest rates and high base effect, it is natural behavior for car sales to slow,” said Juergen Maier, a Vienna-based fund manager at Raiffeisen Capital Management that oversees about $1.2 billion of emerging-market assets. “You will see a slowdown this year and in the first half of next year because of the global uncertainty.”
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