Jan auto sales hit monthly record in China

The Chinese auto market saw a monthly sales record in January with 2.16 million vehicles sold, including passenger cars and commercial vehicle, 5.99 percent up year-on-year, but sales of Chinese-made passenger cars dropped, according to data -released by China Association of Automobile Manufacturers (CAAM) at a press conference Thursday.

In January, 1.85 million passenger cars were sold in China, with a year-on-year growth of 7.03 percent, according to the CAAM.

Chinese brands sold 709,400 passenger cars, 5.07 percent lower than the same period last year. This made up 38.4 percent of the passenger cars sold in January, 4.9 percentage points down year-on-year, according to the CAAM data.

The market share of Chinese brand passenger cars in January is the lowest in the last two years, the CAAM data showed.

Dong Yang, deputy secretary-general of the CAAM, attributed the declining market share of Chinese brands to their limited competitiveness.

"The market share of Chinese brands may continue to decrease for the rest of this year," Dong said. "The next several years will be a hard time for Chinese brands."

The declining trend was due to the competitiveness gap between Chinese and foreign brands in the fiercely competitive Chinese market, Zhang Zhiyong, a Beijing-based independent analyst, told the Global Times Thursday.

The auto markets in the first- and second-tier cities in China are entering an upgrading stage with many residents having already bought cars, but likely to purchase cars manufactured by foreign brands over Chinese brands as their second cars, said Zhang.

Meanwhile, foreign carmakers are reducing their prices in China, so the Chinese brands' price advantage is fading, he said.

The CAAM also released a statement on Thursday at the conference that it is firmly against lifting the foreign share limit of auto joint ventures in China.

According to the current Chinese regulation on foreign investment in automobile industry, foreign companies cannot have a stake exceeding 50 percent in joint ventures.

However, there have been discussions for several years urging the removal of this "red line" of 50 percent.

Lifting the red line will completely destroy the Chinese auto industry, the statement said, noting that without the share limit, foreign auto companies can easily strangle Chinese auto brands by dumping or cutting Chinese automakers' supply chains, according to the statement.

The share limit will not be removed soon because Chinese auto brands are not mature enough to face an entirely open market, but Chinese auto makers should be prepared for that, Zhang said.