China: April retail sales rise at slowest rate in five months image

The world’s largest auto market is beginning to show its weakness as the second largest economy on the planet is slowing down to the lowest growth level in years, impacting consumer confidence and spending on big-ticket purchases.

The passenger-vehicle sales hit their slowest growth rate in the past five months, with retail deliveries (as opposed to wholesales, who are not the best indicator for auto industry health) of cars, multipurpose and sport utility vehicles soaring 6.2 percent to 1.61 million autos last month, according to data coming from the state-backed China Passenger Car Association, hitting the lowest increase level since November. Automakers across all segments have started increasing their incentive pledges, with local producer BAIC Motor forecasting the auto sector will see the traditional price war from now on – which is going to impact soon the profit margins. Additionally, local automakers are finally managing to put some pressure on the global rivals, recuperating some of the lost market share by introducing affordable SUVs to tap market demand across the fastest-rising segment in China.

According to the latest projection issued by the China Association of Automobile Manufacturers, China’s overall auto deliveries this year will grow by less than 7 percent, with sales impacted by the slumping economic increase and the numerous restrictions on auto registrations imposed by key cities in the country. SUV sales jumped 56 percent last month, MPVs followed with a rise of 20 percent while the traditional sedan sector has slipped 6.6 percent, the CAAM Said.

Via Bloomberg