Chinese auto market slows

China is one of three nations with potential for huge sales growth in the domestic new-car market. Along with India and Russia, China is a booming economy with an enormous need for resources. That includes petroleum.

Global analysts attribute Chinese consumption of petroleum for rapidly rising fuel prices. Now however, the China Daily reports a downturn in new car sales for the first half of 2008 -- and ironically, it may be due to buyer sentiment in the face of higher fuel prices.

With the Beijing Olympics due to commence next month, the Chinese government is implementing restrictions on vehicle operation during the course of the event and analysts are also suggesting this is having an effect on new-car sales.

According to the media outlet, the China Association of Automobile Manufacturers (the Chinese equivalent to the FCAI), reported 3.61 million passenger-car sales for the period from January to June of this year. That figure represents a 17.07 per cent improvement on the YTD sales for the same period in 2007. However, the growth rate itself is slower than the growth rate for YTD 2007 versus YTD 2006. A year ago, the growth rate was 22.26 per cent, so growth has slowed by 5.19 per cent.

That's still growth of course, but it's possibly a signal that the Chinese new-car market will proceed at a slower pace than expected. The Olympics clean-air restrictions would possibly affect car sales in and around Beijing, but are unlikely to affect the rest of the country, so the higher fuel prices are the more likely prognosis for slower sales growth.

Within the analysis of new-car sales, came the news that SUV sales have risen 49.25 per cent -- and that's attributed to the demand for such vehicles to provide disaster relief, following the earthquake and aftershocks that hit Sichuan Province in May.

Local analysts expect the Chinese market to return to full growth in September, but consumers are taking a more measured approach, monitoring fuel prices in the meantime.

Two of Volkswagen's joint ventures (FAW Volkswagen and Shanghai Volkswagen) are the top-selling companies in the country, but Shanghai GM is in third place. The other companies in the top ten are: FAW Toyota, Chery, Dongfeng Nissan, Beijing Hyundai, Guangzhou Honda, Geely and Chang'an Ford.

Shanghai GM's third-place ranking and even Chang'an Ford scraping into the top ten provide some hope for the embattled American car makers, currently struggling in their home markets.

The General Motors joint venture is led by ex-pat Aussie, Kevin Wale, in the role of President. Sales growth across all the company's brands (Chevrolet, Buick, Cadillac and Wuling) is around 12.7 per cent, year-on-year, based on a year-to-date total of 590,126 units.

Ford sold 172,411 units during the six months, year-to-date -- a 21 per cent sales increase on the same period in 2007. Of those sales, 116,903 were sold through the Changan joint venture -- a 25 per cent increase over last year.

China is where it's at for Honda also. The Japanese company experienced flat sales in the home market, but has enjoyed 21.3 per cent sales growth for January to June 2008, selling 186,991 units, year-to-date.

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