Car shoppers continue to wait and see in

　　1200 stocks dropped over 5%, while only 35 stocks witnessed growth. A-stock’s sudden slump has led to a complete drop in Asia - Pacific stock markets. In addition, Hang Seng Index was down to 2.3%. Nikkei and Straits Times Index slipped to 1.3% and 1.4% respectively. The Australia stock market also fell to its lowest in three weeks…

　　During the final days of June, the performance of China’s stock market has made jaws drop. On the other, the boom in car sales has gone, as Chongqing Motor Show in June was considered as a turning point for the automotive market.

　　Compared with May, car sales in Huizhou slipped about 30% in June, even 50% for some car dealers.Car shoppers still wait and see, as the prices haven’t hit the bottom line yet.

　　It is a blistering hot month for the World Cup, but not the automotive market definitely. According to Nanfang Daily, reporters who interviewed some big automotive markets in Huizhou, have found that car dealers have been through a tough time during the World Cup. Football is only what consumers are talking about, such as Brazil, Argentina, North Korea football teams, and some celebrities including Lionel Messi, Kaka and Cristiano Ronaldo. However, as for 4s shops, the business is cold and cheerless. Except someone participating the promotion activities, along with others who have their cars maintained, there are few car shoppers in 4s shops, in contrast with the surging car sales during May Day Golden Week.

　　According to statistics released by China Automobile Association, there was a slump in both car production and sales in May. In addition to the World Cup, which has drawn people’s focuses, the drop in car sales usually happens in June. Therefore, the automotive market will definitely remain in decline compared with the last month. The prediction about China’s automotive market in 2010, sales boom turning to sales slump, has been verified as well.

　　According to a current survey about the potential for consumers buying cars, 76.91% of respondents thought the current vehicle prices haven’t dropped to the bottom, and still take a wait-and–see attitude. Many popular vehicle models even have dropped ten thousand Yuan. However, consumers are still not satisfied. Our reporters have leaned about that almost as many as 2/3 citizens and car fans, who have accepted the interviews, have thought the vehicle prices would remain in decline, when they have been asked about the vehicle price trend this year. In this case, the next half year has been considered as a best opportunity to purchase vehicles. Someone even thought it would be more economical to purchase vehicles in the fourth quarter.

　　The automotive market is cold and cheerless.

　　As for the bleak market in Huizhou, some car dealers have ascribed it to the evil weather and the opening of 2010 World Cup.

　　“It has been raining, so people are reluctant to going outside. There are fewer and fewer people to look at or purchase vehicles in automotive market. That is to say there is an objective reason for the sales slump,” some salesmen have told to reporters. Owning to continuous rain in June, especially rainstorm, the automotive market has seen a huge drop in Huizhou objectively. Besides weather conditions, according to some car dealers, the opening of World Cup had a huge impact on the automotive market. Most car shoppers are males, and most males are also football fans. Therefore, this group’s indifference to cars has totally cooled down the automotive market.

　　Of course, above factors haven’t cooled off the automotive market fundamentally. According to some insiders of the sector, the slump in car sales has resulted from the market factor. June is a bleak month usually, and the boom in sales has lead to the increase in car inventories. The weather happened to be not good and the World Cup kicked off this month. So these two factors have been involved in. Besides market factor, car shoppers’ psychology has played a great role. During the interview, a car fan surnamed Liu said it’s quite normal that car prices drop. Car dealers would not lose money to sell cars. In addition, the current performances of property and stock markets have affected the automotive market. Therefore, he and his friends have all decided to inject money into the stock market to scoop up.

　　The automotive market will be warming up or cooling down?

　　Actually, according to some insiders in the sector, the continuous boom in car sales from last year has been considered as an abnormal growth. The automotive market has returned to a rational status since the second quarter of this year. Some unfavorable factors will be fully shown in the next half year, as well as make a huge impact on the growth of the automotive market, such as the expansion in production capacities, the growing car inventories, and the imbalance between supply and demand. Some experts thought it’s inevitable for automakers to launch some promotion and price wars, while the others still sees growth in automotive market. As for the growth scope, it still needs observing.

　　Owning to the monthly decline in car sales in the first half of the year, most domestic automakers are not optimistic to predict the automotive market in the next half year. The overall car sales in 2010 will be universally predicted to increase 20%, at about 17 million units. Nevertheless, it’s still difficult to achieve this target in accordance with the current situation.

　　“The charm of Chinese auto market lies to its unpredictability,” someone who is in charge of a carmaker has said so. “When everyone has thought there would be a huge drop, the automotive market would witness its surprising boom, such as year 2009. However, when people saw a growth in the market, a slump happened instead, such as year 2004.” As for a great number of automakers, their production capacity will reach to at least 15 million units this year in accordance with a conservative estimate. If they would like to complete this desired sales targets, it means they have to share their targets with car dealers. Reporters have learned that some car dealers have burdened much more pressure this year, as their sales targets have been increased in the foundation of last year’s sales volume.

　　However, as for car shoppers, it will be a best opportunity for them to purchase vehicles. With the growing competition and promotion activities, the automotive market has turned back to a sellers’ market orientated to consumers from a buyers’ market in 2009.

　　International oil prices dropped, while domestic oil prices are hard to fall.

　　Affected by some factors including unfavorable statistic in United States’ property market , as well as stronger US dollars against euro exchange rate, the forward price of international crude oil still remained at above 78 US dollars on June, 22. Thus, due to the sudden slump in international oil prices, the prediction that domestic oil prices may drop on July 1 will be probably hard to realize.

　　According to some analysts, the current oil market looks no different from the stock market. Shanghai Composite Index has fluctuated around 2500 points for almost a month, and hit to the previous 2481 points, the lowest record, on June, 29. During this period of regulated oil prices, international oil prices have suffered the most volatile trend: oil prices have suddenly dropped 4% in Brent, Dubai and Cinta after adjusted only for one week. Some experts said there is a slim chance of a probable drop in domestic oil prices, and the retail prices will be predicted to remain steady. At the same time, due to the prediction that domestic oil prices may not drop, the prices in gasoline and diesel will grow to 10or 30 Yuan per ton.

　　Owning to the sales slump, growing inventories, and auto growth’s slowdown in two consecutive months of the second quarter, the cold attitude has arose people’s concern: is China’s automotive market stepping into the bubble phase?

　　Actually, no matter whom they are, from government, automakers to car dealers, or market analysts, most of them have thought it’s unreasonable to put forward that bubble economy exists in the automotive market. It will be too pessimistic to predict the probable bubble economy only judging from sales slump for two months.

　　Car sales of last five months have surged 2 million units achieved in the same period of last year. Thus, some optimists predict that the overall sales could easily exceed 16million units, even if the sales could remain the same as last year. However, reviewing from the reality of the development in China’s car industry, it’s normal for automakers to have production capacity surplus due to the low car population per person, even though the inventories have increased. Besides, as the real economy, the profit of China’s auto industry has grown with its expanded sales scale. Thus, it’s ridiculous to mention the bubble economy in auto industry.

　　The growth of the world economy has decreased with the US dollars’ appreciation and Europe’s debt crisis. Therefore, the prices of crude oil and industrial metals have dropped. In addition, owning to the state’s policies of the domestic property market, the investment has decreased, and the prices of steels have fallen. Most important, the government has continued to strengthen its support to domestic auto sector. All those factors have played great roles in the development of the auto market.

　　Currently, while some preferential policies have been carried out orderly, including the subsidies for new energy and energy-saving vehicles, along with the new round of trade-in vehicles, National Development and Reform Commission has proposed that new energy and energy-saving vehicles will reach 4 million units in 2012. The government has planned to provide subsidies of 10billion Yuan to achieve this target and annual fiscal revenues would achieve 5 billion Yuan. At the same time, all automakers began to pay more attention to the balance between demand and supply, and timely adjust sales and production plans so as to keep inventories as a reasonable level.

　　Therefore, when the development in sales channels of Chinese indigenous cars and new energy plan both seem to turn into a market bubble, Chinese automakers are trying to win the battle by quality, not quantity. After all, China’s automobile industry has been playing an irreplaceable role in speeding up the transformation of economic growth pattern. (translator: qinghua: serena)

　　See original Chinese report please click: http://auto.sohu.com/20100702/n273229204.shtml