China Auto Sales Rise on Steeper Discounts to Pare Inventory

  • Passenger-vehicle sales rise 1.2% to 1.78 million units in May
  • Compact SUVs, small sedans saw bigger price cuts: Ways

China’s passenger-vehicle sales rebounded last month as automakers and dealers offered steeper discounts on old models to make room for new offerings amid intensifying competition.

Retail sales of cars, sport utility vehicles and multipurpose vehicles rose 1.2 percent to 1.78 million units in May, after declining in April, data released by China Passenger Car Association on Thursday show. For the first five months, sales slipped 0.9 percent.

Automakers and dealers offered bigger incentives during the Labor Day and Dragon Boat Festival last month as demand tapers off a record year with the increase of a sales tax on small-engine cars. Local manufacturers including Great Wall Motor Co., which started sales of its first upscale model in April, and Chongqing Changan Automobile Co. lowered prices on old models that are losing appeal.

Compact SUVs and small sedan segments saw steeper price cuts last month, led by Volkswagen’s Lavida and Ford’s Kuga, according to Liu Xiaojie, an analyst with Ways Consulting Co., which tracks incentives from dealers.

Segment breakdown:

  • SUV sales rose 17% to 718,532 units
  • Sedan deliveries slid 4.7% to 878,679 units
  • Multipurpose vehicles, or minivans, fell 16% to 143,945 units

Geely Automobile Holdings Ltd.’s sales jumped 67 percent helped by demand for its Boyue SUV, which features Internet connectivity and voice-recognition system. The automaker has said it will start selling the first model under its new premium brand from the fourth quarter. Deliveries of Great Wall Motor declined 3.8 percent, weighed down by its aging Haval models, after the automaker posted its first monthly drop in more than two years in April.

Some Japanese and Chinese brands gained market share while Korean automakers lost ground as tensions linger between China and South Korea over a planned missile-defense system. Nissan Motor Co. sales increased 5.7 percent to 112,085 units, led by Teana and Sylphy sedans. Sales of Hyundai Motor Co. and Kia Motors Corp. in China fell 65 percent to 52,485 units, Yonhap News reported. The market share of Korean brands fell to 4.2 percent in the January-to-April period from 6.9 percent a year earlier.

— With assistance by Yan Zhang

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