China Auto Sales Will Tank if Stocks Enter Bear Market

China’s vehicle sales may post its first annual decline in more than 17 years if the stock market continues to slide, according to the China Automobile Dealers Association.

Vehicle sales will tank if an equity rout continues, and expand 1 percent to 2 percent this year if stock prices stabilize and the economy recovers, said Luo Lei, deputy secretary-general of industry trade group.

“A stock market plunge hurts consumer confidence,” Luo said in a phone interview Friday. “People wouldn’t want to spend on cars when the market keeps on declining. Dealers are sacrificing their margins and giving out big incentives to help attract buyers.”

Automakers used to the 17 percent average growth rate in China vehicle sales in the last decade are now reining in their predictions. From the consensus view that vehicle sales will grow at about the same pace as the country’s GDP, many manufacturers are now cutting further back on on their sales targets as demand deteriorates.

Among those that have publicly stated their targets, Ford Motor Co. predicted industrywide demand could shrink this year. Audi AG reduced its forecast for global deliveries citing uncertainty in its largest market. PSA Peugeot Citroen and Mazda Motor Corp. have warned of a price war among carmakers seeking to bolster sales.

— With assistance by Tian Ying

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