Auto sales see optimistic market in China

With the total vehicle sales rising 5.2 percent year-on-year in April, the thriving Beijing auto show and the fuel prices cut, analysts are optimistic about the prospect of China's auto industry.

The China Passenger Car Association released statistics last Wednesday showing that a total of over 1.15 million cars, sport utility vehicles, multi-purpose vehicles and minivans were sold in April. That figure was down 9.3 percent from March but up 6.3 percent from a year earlier.

Rao Da, secretary-general of the China Passenger Car Association, believed that the auto sales gains in three consecutive months "proved that China's vehicle market has already recovered from a recession at the end of last year."

He said that the recently concluded Beijing auto show, which presented many new models, as well as fuel price cuts and Japanese automakers' recovery from the longer-term impact of last year's earthquake will support further sales growth in May.

Auto sales statistics

Because of the slowing economy, the removal of subsidies and tighter rules on new car registration, China's auto sales growth slowed dramatically during the first few months of 2012, prompting analysts to express concern about the 8-percent growth target set for the world's largest auto market.

However, the country's auto industry showed a trend of recovery in April, as vehicle sales rose 5.2 percent, rebounding from a 3.4-percent fall registered during the first quarter.

Overall auto sales, including passenger cars and commercial vehicles, fell 1.33 percent year-on-year to 6.42 million units from January to April, while output rose 0.47 percent year-on-year to 6.43 million units, the China Association of Automobile Manufacturers (CAAM) said last Wednesday.

Some 5.05 million passenger cars were sold in the four-month period, up 1.9 percent year-on-year, according to a statement on CAAM's website.

Foreign auto makers continued to fare better than domestic rivals.

The sales growth of German-branded passenger cars exceeded 10 percent, while Japanese, French, American and Korean auto makers all reported year-on-year growth in sales.

However, Chinese-branded passenger car sales fell 5.2 percent from the previous year to 2.14 million vehicles during the first four months, with their combined market share retreating 3.2 percentage points.

Yao Jie, vice secretary general of the CAAM, said the rebound in sales was somewhat due to a structural adjustment of the domestic auto industry.

Yao said the overall situation was good for the auto industry as fixed-asset investment remained robust, residents' incomes keep rising and the fundamentals of Chinese economy remain unchanged.

Meanwhile, CAAM data showed that Chinese auto exports hit a new high of 87,400 vehicles in April, an increase of 29.5 percent from the previous year.

The country's total auto exports reached 278,900 units during the first four months, according to CAAM.

Fuel prices cut stimulates consumption

China lowered the per-ton retail prices of gasoline and diesel by 330 yuan (52.38 U.S. dollars) and 310 yuan, respectively, from last Thursday.

The auto industry insiders believe that the move, which marks the first cuts since October of last year, will influence customers mostly on the psychological level.

Liu Jianhong, marketing manager of a Buick store in Guangzhou, said that the fuel prices cut has more impact on economy cars. Customers for economy cars value the fuel consumption and the post maintenence cost, and they will be more motivated by the price cut.

However, from a long run, if there are no additional stimulus measures coming out, the fuel prices cut won't affect the market too much.

Optimistic prospect

Analysts believe that as long as the country maintains the continuity and stability of its auto industry policy, and introduces new incentives to boost the development of domestic auto makers, the prospect of auto market is optimistic for the whole year.

Meanwhile, they suggest that the government should increase auto exports and continue to encourage car owners to scrap older vehicles.

Yao Jie, vice secretary general of the CAAM, also suggested the government cut interest rates to relieve financing burdens on auto companies.

He warned that drastic fluctuations of raw material prices, an appreciation of the yuan, the credit crunch, higher labor and energy costs may continue to hinder the sector's development.

Hopefully, this year's auto market will be like the recently concluded Beijing auto show, bring more surprise than expected.