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China's September Auto Sales See Highest Drop In 7 Years


10/12/2018


China's September Auto Sales See Highest Drop In 7 Years
There is a rising concern among economists that a slowdown in Chinese economy and an escalating trade war can see a contraction in the auto sale this year in China for the first time in decades after data revealed that sale of cars in September in the largest auto market in the world dropped to a seven year low.
 
There was a 11.6 per cent drop in the sale of autos at 2.39 million units in September in the market, noting a third straight month of drop according to the data released on Friday by the China Association of Automobile Manufacturers (CAAM). The steep fall in sale was accorded to a slowing economy, deleveraging and a strict pollution crackdown.
 
The Chinese leaders would be concerned by the stalling of China’s giant auto sector. This sector accounts for an important component of the economy and its performance is a bell weather for whether the Chinese consumers are ready to spend on consumer goods.
 
“The automotive industry has been a driver of China’s economic growth for years. Now it is pulling back,” Xu Haidong, CAAM assistant secretary general, said at a briefing in Beijing.
 
The largest auto association of China said that the forecast which it had made for the sector for the complete year, which was already low, would not be attained. But it believes that there would ultimately be no contraction in sale. There have been predictions by analysts of a contraction in the Chinese auto industry for the first time since the 1990s.  
 
The most recent data about the auto market also underscores the future for foreign car manufacturers such as General Motors and Toyota Motor, which would be tough, according to analysts at a time when the car makers are depending on China for growth.
 
The data also indicates that impact of the trade war the auto segment was amongst the industries that were the hardest hit.  
A sluggish economy and the knock-on effects of the trade war impacted sale., CAAM said last month.
 
The stock markets in China have been in turmoil for some time now and the factory sector slowed down last month after over a year of expansion which underscores the economic malaise of the country. China’s growth forecast was cut to 6.2 percent from 6.4 percent for next year by the International Monetary Fund.
 
Chinese authorities have already taken measures to increase liquidity ion the market due to these concerns. 
 
After an increase in auto sale by 4.8 per cent in July, vehicle sale in China has seen a straight drop for the next two months with fall of 4.0 per cent in August and 3.8 per cent in September.
 
The fall in the sale in September was the highest after a 26.4 per cent drop in January of 2012 which was partly because of an unfavourable timing of the Chinese new year holiday.
 
For the first nine months of the current year, there has however been a 1.5 per cent increase in sale year-on-year and there was 20.49 million vehicles sold in the time period.
 
(Source:www.reuters.com)


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