Chins Car Sales Trail Forecasts as Buyers Seek Incentives

China’s passenger-vehicle sales trailed analysts’ estimates for the first time in five months, as demand slowed with the economy and some consumers held back purchases in anticipation of government stimulus measures.

Wholesale deliveries, including multipurpose and sport utility vehicles, gained 11 percent to 1.12 million units last month, the China Association of Automobile Manufacturers said in a statement today. That compares with the 1.16 million average estimate of 10 analysts surveyed by Bloomberg.

Auto sales are slowing in the world’s largest vehicle market as the economy expanded at the weakest pace in three years. Consumers are postponing vehicle purchases in anticipation that the government will introduce subsidies to encourage demand, according to industry researcher LMC Automotive.

“The slowing economy and logistics demand impacted sales” of mini-commercial vehicles commonly used to transport people and goods, said John Zeng, Shanghai-based director of Asian forecasting at LMC Automotive. “Since the government announced it may introduce a possible subsidy policy, there has been no solid policy. That has created a ‘wait-and-see’ attitude among consumers.”

In the first seven months, passenger-vehicle deliveries rose 7.5 percent to 8.74 million units, the association said.

SUVs Outperform

Total sales of vehicles, including trucks and buses, increased 8.2 percent to 1.38 million units in July. Sport utility vehicle deliveries gained 30 percent, the best- performing segment tracked by the group.

General Motors Co. (GM), the largest foreign carmaker in China, said sales in the nation gained 15 percent last month to 199,503 units, led by demand for its Wuling-branded mini commercial vehicles. Honda Motor Co. (7267)’s July vehicle sales rose 1.3 percent to 52,045 units, the company said.

Toyota’s China deliveries fell 5 percent in July to 78,400 units. Inventory is building up at carmakers in China and Toyota cut back on production in the country around spring, Senior Managing Officer Takahiko Ijichi said Aug. 3. At Nissan Motor Co. (7201), sales in China slid 2 percent last month to 98,100 units.

China’s passenger-vehicle sales growth will probably accelerate in the second half, rising 15 percent to 8.48 million units, driven by demand from first-time buyers and as the economy rebounds, CAAM said last month. Full-year deliveries may increase 11 percent to 16.09 million units, according to the association.

Price Cuts

Intensifying competition in the Asian nation this year has led to a buildup in inventory and steeper price cuts among distributors.

Dealerships are offering as much as 25 percent off China’s best-selling passenger vehicle, GM’s Buick Excelle, which starts at 129,900 yuan, according to cheshi.com, a website that tracks vehicle prices.

A measure of vehicle inventory rose to the highest level in four months in June, a level considered “cautionary” by global standards, the China Automobile Dealer Association said in an Aug. 1 statement.

“The oversupply situation persists,” Cheng Xiaodong, head of a unit that monitors auto prices at the National Development and Reform Commission, said in an e-mailed statement July 16. “Facing sluggish demand and rising inventory, dealers will increase discounts and incentive offerings in the coming months.”

Car Restrictions

Xi’an’s city government put out a draft plan that includes a provision allowing it to “control the total volume of vehicles and introduce restrictions on their use according to traffic conditions,” according to its website. The proposal, for which authorities are seeking public feedback until Aug. 15, is one of 88 regulations listed in the document.

The northern Chinese city won’t limit the number of vehicles in the short term, the National Business Daily reported today, citing an unidentified person with the city government.

The southern city of Guangzhou on June 30 imposed a cap on the number of new vehicle registrations at about half of last year’s total. Beijing, Shanghai and Guiyang are the other Chinese cities with restrictions on ownership.

“We are cautiously optimistic about China’s auto sales this year,” Dong Yang, CAAM’s secretary general, said at a briefing in Beijing today. “But if another three or five cities pop up with such restrictions, it would be tough for auto sales to reach our annual target.”

China should make available retail sales data to give the industry a clearer picture of vehicle inventory levels, he said.

Unlike major car markets such as the U.S. and Germany, China doesn’t release figures on private car registrations and retail sales. Private car registrations are compiled by Chinese police and include the buyer’s age, gender, zip code and vehicle model.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net; Tian Ying in Beijing at ytian@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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