Published On: Mon, May 11th, 2015

Vehicle Sales Growth Drops In China

A Road In China

Due to market conditions outside of China’s control manufacturers are seeing slower than anticipated sales growth.

The Chinese Association Of Vehicle Manufacturers said on Monday that sales had dropped 0.5 percent in April in comparison to last year due to Chinas continuing slwing economy which has reduced the demand for domestic cars in the country.

In addition to this data the global market for Chinese cars is also flailing. CAAM reported vehicle exports fell for the fourth consecutive month in April. This has been put down to the weak Korean won and Japanese yen making its neighboring countries exports better value for buyers money.

Sales growth is only up 2.8% in the first quarter of this year compared to 3.9 percent the previous year causing CAAM to state that it would be tough for the country to meet its 7 percent growth target for auto sales overall in 2015.

Foreign brands have generally held up; sales of Toyota, the world’s largest vehicle manufacturer, rose by 7.8 per cent to more than 92,600 units last month according to CAAM. Honda, another Japanese automaker sold 71,546 units in China in April, up 11.7 per cent in comparison to last year. The US automaker Ford sold 96,889 vehicles in the country in April, whilst the numbers are similar to 2014 their year-to-date sales are up 7% from the same period last year to 393,714 vehicles.

China’s auto sales reached 23.49 million vehicles last year, jumping 6.9 per cent from 2013.

The vice secretary of the association, Shi Jianhua said “The situation for automobile exports this year is not optimistic.”

The problems come despite the government recently launching the “Made in China 2025” campaign which was announced by Premier Li Keqiang in March. The campaign aims to create global leaders in a variety of industries, including automobiles.

A lot of the challenges China faces abroad have been caused by the strong dollar and slumping oil prices. The country is more than likely going to miss its 860,000 automobile exports that CAAM predicted this year, a target which was placed roughly 5 percent below 2014 sales.

“For importers, it’s killing them,” said an executive, who was not authorised to speak to the media. “They have to raise retail prices for sure because they have more costs to change to the U.S. dollar to pay us.”

Commodity-producing countries such as Venezuela, Ecuador and Brazil are also victims of lower oil prices, reducing the demand for cars in the countries, he said.

Exports do still only account for a very small portion of revenue for vehicle manufacturers in China. China had 2 million vehicle sales in April whilst only exporting only 61,600 cars.

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