China's auto sales growth slows amid weak economy

[August 09, 2012]  BEIJING (AP) -- Growth in China's auto sales decelerated in July, data showed Thursday, adding to signs of weakness in the world's second-largest economy.

Passenger car sales rose 11 percent to 1.12 million, down from June's 15.8 percent rate, the government-sanctioned China Association of Automobile Manufacturers reported. Total vehicle sales rose 8 percent to 1.38 million, down from the previous month's 10 percent gain.

Auto sales spiked in 2009 and 2010 after Beijing responded to the global crisis by cutting taxes and offering subsidies. But growth has dropped off since those incentives ended and the economy's rapid expansion slowed.

"The data show the slowing trend has not changed, and it will be more difficult in the second half of the year," said Jia Xinguang, an independent auto industry analyst in Beijing.

The slowdown is a setback for global automakers that look to China to drive revenues as sales in the United States and Europe slow, though General Motors Co. and Ford Motor Co. said their July sales grew faster than the overall industry.

GM reported sales by its China unit and local partners rose 15.1 percent to 199,503 vehicles while Ford said sales were up 32 percent at 42,560.

China overtook the United States as the biggest market by vehicles sold in 2010.

China's growth in factory output and retail sales slowed in July, prompting suggestions Beijing might launch new stimulus measures. Analysts expect economic growth of about 8 percent this year -- above U.S. and European levels but weaker than China's double-digit rates of recent years.

Citigroup said it expects a 5 percent rise in total auto sales this year, down from 2009's explosive 45.5 percent expansion and 2010's 32.4 percent rise.

Beijing, Shanghai and the southern cities of Guangzhou and Guiyang have imposed restrictions on car ownership to curb traffic. Some drivers in other cities have rushed to buy before they face limitations but that boost is expected to be temporary.

"The auto-purchasing limitations encourage sales in the short term but not the longer term," said Zhang Xin, an auto analyst for Guotai Jun'an Securities in Beijing.

"Traffic jams, the high cost of parking and more and more subways are all reasons the auto industry will not develop as fast as it has in the last few years."

[Associated Press]

AP researcher Fu Ting in Shanghai contributed.

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