The slowing economy made the Chinese auto sales register their slowest pace since 2012, increasing by only 4.7 percent last year.
The tumult of the stock market and the slowing pace of the economy have forced the auto makers selling in China to report in 2015 the smallest growth in three years, even if the government has intensified its efforts to boost the demand in the last quarter. Wholesale deliveries of passenger and commercial vehicles rose by 4.7 percent to 24.6 million units last year, according to the state-backed China Association of Automobile Manufacturers. By comparison, light-vehicles sales climbed 5.7 percent to 17.5 million in the United States, according to Autodata Corp. Sales of passenger vehicles marked a 7.3 percent increase to 21.1 million units last year, while commercial vehicles, which includes buses and trucks, fell 9 percent to 3.45 million units. Earlier in the 2015, Ford Motor advanced the possibility that industry annual sales in China may even fall, before the government decided to lower the purchase tax for new cars from 10 to 5 percent for the vehicles using engines 1.6 liters or smaller, from October through the end of 2016, thus reviving the demand.
“The opportunity for the auto industry in China to consolidate production capacity and improve profitability over the long term was stopped in its tracks when the government lowered vehicle purchase tax that artificially boosted demand,” said Steve Man, a Hong Kong-based analyst covering the auto industry at Bloomberg Intelligence. Nevertheless, China Association of Automobile Manufacturers is optimistic about 2016, forecasting a 6 percent acceleration of vehicle sales this year to more than 26 million units.