Chinese car sales gather speed
[2008-12-23 17:04:27]
Chinese car sales and production figures showed surprising growth in October after several months of weakness caused by the global financial crisis and a precipitate drop in China's stock market.
Estimates released on Thursday by the China Association of Automobile Manufacturers showed that October production of passenger vehicles in the world's second-largest car market rose by almost 10 per cent year-on-year. This follows a small year-on-year decline in September.
Dealer surveys in September had shown a shop drop in showroom traffic, JD Power said, but October showroom traffic was up slightly.
Car sales in China are closely watched as an important signal of domestic demand at a time when the world is counting on Chinese economic growth to help support global growth.
Earlier this week, the Chinese government announced an economic stimulus package, aimed in part at boosting confidence among consumers such as car buyers, who appear badly shaken by the global crisis.
But it was not clear whether October's car market figures represented a blip explained by car purchases during China's week-long national day holiday last month, inventory building, or whether it is an early sign of recovery.
The latest data appeared to contradict the trend in figures also released on Thursday for Chinese industrial production, which showed that year-on-year growth slowed to 8.2 per cent in October, down from 11.4 per cent in September.
Mike Dunne, head of JD Power's Shanghai office, called the car figures an"October surprise," but said he did not think they marked a turnround.
JD Power would not change its forecast for flat sales next year, at or close to 2008 sales of 5.8m units, he said.
The market's main problem is consumer confidence, with consumers postponing purchases due to fears about a slowdown in domestic growth.
“Should confidence be restored ... we could see a resumption [in growth] but until then look for the consumer to stand on the pause button," Mr Dunne said.
Consumers might also be waiting for lower prices, he said, noting that manufacturers have reacted to market weakness by cutting prices. The world's carmakers will be hoping that the"October surprise" signals a sustainable recovery, since they have until now been able to count on double-digit Chinese sales growth to serve as a buffer against weakening demand in Western Europe and America.
But Li Chunbo, an auto analyst at Citic Securities, cautioned against reading too much into the October figures."The sales jump in October was mainly driven by the one-time effect of the Chinese national holiday, which was two days longer this year than in previous years, as well as the release of more licence numbers in certain provinces."
