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Automobile industry

China's Passenger-Car Sales Growth Slows Down

Strategic Insights

— 1 min read

China's passenger-car sales growth in February fell to the lowest in over two years due to the government's decision to end vehicle-buying incentives and the timing of a weeklong national holiday. Wholesales of passenger cars, including multipurpose and sport-utility vehicles, increased 2.6 percent from a year earlier to 967,200 units last month, according to the China Association of Automobile Manufacturers. This growth pace is the slowest since January 2009, when car purchases fell 7.8 percent. The reduced incentives and timing of China's Lunar New Year holidays contributed to the slowdown, according to industry analysts.

Key Takeaways:

  • Passenger-car sales growth in February slowed down to 2.6 percent year-over-year, the lowest in over two years, due to the government's decision to end vehicle-buying incentives and the timing of a weeklong national holiday.
  • The reduction in government incentives in January led to a decline in demand, with customers bringing forward purchases to the end of last year.
  • China's largest foreign automaker, General Motors, reported slower sales growth in February, with deliveries of its local minivan venture declining.
  • Automakers such as Toyota Motor Corp. and Honda Motor Co. have seen their deliveries slow down in March after China reinstated a 10 percent sales-tax rate on small cars and phased out subsidies for vehicle trade-ins in rural areas.
  • China's auto market saw a 32 percent surge in sales last year, reaching a record 18.06 million, and helping the country stay the world's largest vehicle market for the second year running.
  • Industry analysts at Booz & Co. and Nomura Holdings Inc. attribute the slowdown to the reduced incentives and timing of China's Lunar New Year holidays.
  • Yankun Hou, an analyst at Nomura in Hong Kong, forecasts passenger vehicle sales growth to be around 13 percent this year.

Statistics:

  • Passengers-car sales growth in February: 2.6 percent year-over-year
  • Total passenger-car sales in February: 967,200 units
  • Slowest growth pace since January 2009, when car purchases fell 7.8 percent
  • China's auto market sales growth last year: 32 percent to a record 18.06 million
  • General Motors' sales growth in February: 6 percent year-over-year

Sources:

  • Bloomberg News,
  • China Association of Automobile Manufacturers
  • Booz & Co.
  • Nomura Holdings Inc.
  • General Motors Co.

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