China’s auto market continues to cool down

　　China’s automotive market continues to show signs of cooling down. Data issued by China Association of Automobile Manufacturers (CAAM) on June 8, auto sales growth is clearly showing signs of slowing down over the last month, however, keeps increasing year on year. According to National Passenger Cars Information Exchange Association, the automotive market is expected to return to a normal growth track from the previous “blowout” till August.

　　Auto sales scale a record high.

　　In May alone, China’s auto sales accomplished 1.42 million units and 1.44 million units, respectively, down 9.4% and 7.5% over the previous month, however, increasing 27.9% and 28.4% year on year. For the January-May period, auto sales were 7.54 million units and 7.6 million units, up 55.6% and 53.4% over the same period of last year. Auto sales growth declined 8.2% and 7.3 % respectively compared with January-April period.

　　According to CAAM, the first five months of auto sales still remained on a high-speed growth, and scaled record high, at 1.5 million units per month on average. As monthly auto sales achieved a faster growth and the total number of auto sales was rising, the auto sales growth will return to a steady rebound year over year, or month over month. The excellent performance of automotive market for the first five months has already laid a foundation for sales target at 15 million units this year.

　　In May, except semitrailer towing vehicles, the production volume of all kinds of vehicle models was down over April, including passenger vehicles and commercial vehicles. Nevertheless, all of them achieved a positive growth year on year. Auto sales of SUV and semitrailer towing vehicles doubled year on year, as well as commercial vehicles did better than passenger vehicles.

　　National Passenger Cars Information Exchange Association said the auto market showed the illusion of “blowout "owning to the market digesting last year’s hidden orders in Jan, this year. The market will start to rebound in February till July or August. But there will be no negative growth in monthly sales year on year during this period. In May, a short vacation, auto sales will decline due to automakers cutting auto production. Meanwhile, many rich people being stuck in the stock market will interfere in the auto market on short term.

　　Auto sales of MPV achieved a 70% of growth over the previous year.

　　The sales and production volume of passenger vehicles were respectively 1.03million units and 1.04 million units, down 9.7% and 6.1% over last month, but up 25.5 % and 25.9% year on year. Amongst passenger vehicles, the sales of MPV and cross-over vehicles dropped 10% on average over last month. Compared with them, the drop in sedan and SUV was slightly lower, less than 4%. Compared with the same period of last year, all models of passenger vehicles maintained normal growth. SUV and sport vehicles performed better than any of other vehicles, with a 70% of growth. The auto sales of sedan achieved a 20% of growth. Owning to the better performance last year, the sales of cross-over vehicles maintained a slow growth year on year.

　　Accounting for 67.7% of passenger vehicles, there was a slight drop in the market share of vehicles with engines of less than 1.6liters, which were sold more than 710 thousand units in May, down 4.1% over the last month, and up 18% compared with the same period of last year. As for auto sales, there were 3 months in the first five months lower than that of the same period of last year. For January-May period, vehicles with engines of less than 1.6 liters accounted for 69.2% of passenger vehicles, down 2.04% over the same period of last year. According to CAAM, Sales of 1.6L and below passenger vehicles, most influenced by the preferential policies, witnessed a slight drop of market share owning to the weakening effect of the stimulus policies.

　　The sales and production volume of commercial vehicles were 385 thousand units and 395 thousand units respectively, down 8.5% and 11% over the previous month, however, up 34.6% and 35.7% compared with the same period of last year. Semitrailer towing vehicles performed comparably well, with positive production growth and a slight drop in sales. Also, its growth doubled year on year, maintained a stable growth over the last month.

　　The decline of automakers’ inventories remains a reasonable level.

　　Until May, the inventories of automakers (retail sales not included) were 513.4 thousand units, decreasing 34.1 thousand units over the beginning of this month, and 73.6 thousand units over the beginning of 2010. Under the circumstance of 1.5 million units of monthly production, CAAM said, every automaker attached more importance to coordination of supply and production, and carried out their sales target reasonably.

　　Thus, automakers’ inventories have maintained a reasonable level recently.

　　In the aspect of vehicle models, the inventories of passenger vehicles and commercial vehicles dropped relatively, but there is a sharp drop in passenger vehicles. In the end of May, the inventories of passenger vehicles were 321.4 thousand units, down 22.3 thousand units compared with the beginning of the month, including 210.6 thousand units of sedan, which reduced 13.3 thousand units over the beginning of the May. The inventories of commercial vehicles were 192 thousand units in the end of the May, down 11.9 thousand units over the beginning of this month, and the drop in commercial vehicles’ inventories has maintained for 3 consecutive months.

　　National Passenger Cars Information Exchange Association: the auto market will not witness any sharp drop in auto prices.

　　Owning to the cool-off of the auto market, automakers will have to further enhance their auto promotions. There was a drop in auto prices in May, probably till June or August. However, according to Rao Da, general secretary of National Passenger Cars Information Exchange Association, for some automakers, the retail standard prices have maintained unchanged for a long time. Auto prices are hard to go back due to automakers’ promotions. It seems the real prices are way more favorable than the standard prices, which deceived consumers actually. There was a slight drop in auto prices from the beginning of 2010 till now. He added that the wholesales of passenger vehicles achieved a 50% of growth in the first five months, due to a drop in the prices of crude oil, industry metals, and steels. Those factors have been naturalizing those of increasing costs. Thus, the pressure of auto costs has been relieved so that automakers start to carry out promotion activities. However, the auto market won’t be involved in any price wars. (Translator: Qinghua: serena)

　　See original Chinese report please click: http://auto.sohu.com/20100611/n272716635.shtml