China Aug car sales surprisingly robust, policy helps

China’s car sales in August rose 59.3 percent from a year earlier, bouncing surprisingly higher after sluggish sales in the summer months, helped largely by Beijing subsidies for fuel-efficient models.

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A BYD (Build Your Dreams) E6 Electric Car is seen at the North American International Auto Show in Detroit, Michigan January 12, 2009.

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The up-turn in demand in the world’s largest car market could extend into September and October, the best auto sales season, and may continue into the winter months if automakers slash prices to drive sales, industry observers said.

“It’s a big surprise! Everyone was expecting car sales to hit bottom in August, but they didn’t,” said Zhang Xin, a Beijing-based analyst with Guotai Junan Securities.

“The rebound shows that the intrinsic demand for automobiles is still there. A little policy incentive could make a big difference.”

Beijing unveiled a pilot programme in five select cities in June to subsidise green car buyers, with handouts ranging from 3,000 yuan ($440.7) for fuel-saving models to as much 60,000 yuan for electric cars.

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10k jobs lost in private sector for AugustIn August alone, sales of fuel-saving cars came to 129,600 units, up 32 percent from July, according to data provided by the China Automotive Technology & Research Center (CATRC).

“The handouts along with stepped-up promotions by auto dealers to cut inventory, especially for cars with 1.6 litre engines or smaller, and have spurred consumer demand,” said the government-affiliated CATRC in a statement.

China has been a bright spot amid a still struggling global industry thanks to Beijing’s policy incentives, including sales tax cuts for small cars.

But auto sales have started to lose some steam in the second quarter as Beijing taps on the brakes to keep its economy from overheating.

CATRC did not provide specific inventory levels for the first eight months. But it said passenger car inventory in August was equivalent to 58 days of sales, down from 60 days in July.

A total of 977,300 passenger cars were sold in August, up 59.3 percent from a year earlier, CATRC said.

That represents a big improvement in July when 822,300 cars were sold, up 15.4 percent. However, it is still shy of the situation in the first few months of the year when monthly auto sales easily topped the 1 million-unit mark.

OUTLOOK CAUTIOUS

Despite a strong rebound in August, many factors are restraining the pace of car sales, including a slowing economy.

Industry executives also said it was unrealistic to expect sales in China to keep up the sizzling pace of last year.

After a solid first half, which saw SAIC Motor and Geely Automobile post forecast-beating earnings, many industry players are bracing for a slower second half.
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Source: ibtimes.com