China’s auto industry body predicts sales will grow by just 3% this year, down from 7% in January
Car sales slow in China Image: Jeff |
The China Association of Automobile Manufacturers released a revised version of its 2015 forecast that showed sales growth dropping to the lowest rate since 2011 due to a turbulent stock market and soft demand.
China’s stock market troubles have wiped more than $3.9 trillion (23.9 trillion yuan) off share value, causing retail investors to reconsider making costly purchases.
The rout, combined with a slowing economy, led CAAM to lower its expectations for 2015.
Volkswagen has announced it has no intention of cutting back production in China and is now offering financial assistance to its dealers. The group will pay 1bn yuan ($160m) to distributors selling VW cars made by its joint venture with FAW, China FAW Group Corp.
In a recent interview, secretary-general of the CAAM Dong Yang claimed: “China’s auto market would be much more stable if there is no stock market given that it damps demand no matter whether stock prices go up or goes down. If people have extra money, don’t invest in the stock market. It would be nicer if people use it to buy cars.”
Despite efforts by both foreign and domestic carmakers to cut prices, inventories at dealerships continue to swell and demand remain weak. According to data from the China Automobile Dealers Association, dealership inventories, which normally range from 24 to 36 days, had risen to 73-day supplies for imported brands and 55 days for domestic ones. Jaguar Land Rover had the highest dealership inventories at 113-days supply in June.