Foundry Daily News

Chinese auto sales drop in May 2011 dips by 14pct MoM

Yonhap reported that China's automobile sales dropped for the second month in a row in May 2011, pointing to slowing demand after Beijing stopped offering incentives and introduced new limits on car purchases earlier this year.

The China Association of Automobile Manufacturers said that vehicle sales in China shed 13.95% MoM to 1.19 million in May 2011. It was a 29.74% YoY as compared to the same month last year. Auto output fell 14.36% MoM to about 1.31 million units in May 2011.

The industry group attributed the continued decline in May sales to the end of the tax breaks and incentive policies in the country.

The Chinese government ended tax breaks for purchases of small cars at the end of 2010 and re imposed a 10% tax at the beginning of this year. The tax breaks, introduced in 2009 to buoy domestic demand amid the economic slowdown, had boosted China's auto market and helped it overtake the United States as the world's largest in 2009 and 2010.

The CAAM said rising oil prices and quake-hit Japanese car parts suppliers are also negatively affecting auto sales in China.

Mr Wang Qingtao, analyst at China's Sealand Securities Co, has expected the downward trend in the Chinese auto industry would likely continue for a while, saying the market fundamentals are not likely to change drastically.

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