China vehicle sales fall again in May, showing weakness

[June 10, 2015]  BEIJING/HONG KONG (Reuters) - Vehicle sales in China fell for a second straight month in May, the first such consecutive drop since late 2011, highlighting the weakness in the world's second biggest economy.

Passenger and commercial vehicle sales in China totaled 1.9 million vehicles last month, falling 0.4 percent year-on-year and following on a 0.5 percent fall in April, the China Association of Automobile Manufacturers (CAAM) said at a Beijing news briefing on Wednesday.

The last time annual sales declined two consecutive months was October-November 2011.

"Growth in production and sales of automobiles is indeed slowing down," said Yao Jie, vice general secretary of the association. "This situation is basically in line with the government's New Normal in the economy."

Chinese Premier Li Keqiang describes the economy's new stage of development as the "new normal", a period of slowing growth in which the country must shift to more sustainable drivers of growth.

The slowdown in the world's biggest auto market is adding to challenges for many automakers who also face increasing price competition. Last month, General Motors Co <GM.N> said it had cut prices on 40 models in China.

China's economic slowdown is proving worse than expected, with central bank economists on Wednesday trimming their 2015 GDP growth forecast to 7 percent from 7.1 percent previously.

Slowing auto sales are also reflected in a broader slackening of industrial output this year, which hovers at lows not seen since the 2008/09 global financial crisis.

During January-May, sales rose only 2.1 percent from a year earlier, giving 2015 the slowest start since 2012 and suggesting that full-year growth could be well below 2014's pace of 6.9 percent.

In January, CAAM said it expected this year's sales for passenger and commercial vehicles combined to rise 7 percent to 25.1 million, but in March said sales growth could be below 2014's level.

(Reporting by Judy Hua in BEIJING and Jake Spring in HONG KONG; Editing by Kazunori Takada and Richard Borsuk)

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