China: automakers could see negative July sales because of stock market rout image

Carmakers in China could go back to the drawing board to prepare even more drastic strategies because July sales expected to be released this week are likely to paint a grim picture.

The last months sales are widely expected to turn up negative for the fourth month of sliding results after the bullish stock market collapsed and had a tremendous impact on consumer confidence. Many Chinese pledged their longtime economies to the mainland stock market as it had a tremendous rally during much of the year’s first half and refrained from spending the money on big-ticket purchases such as new vehicles, according to analysts. But since the latter half of June the stock market crashed and took to the grave in less than a month up to $4 trillion in share value – and investors channeled their remaining money into stocks as many tried to avoid or counter losses. Deliveries in China, the world’s largest auto market, have also been declining on the back of the slowing economy, estimated to surge at its weakest pace in the past two and a half decades. Automakers have been mitigating the declining sentiment by introducing numerous discounts and initiated cost cutting plans at their local operations.

But analysts and experts predict the economic situation, now combined with the stock market woes, has affected July sales more than June’s negative performance of 2.3 percent. “Car manufacturers are biting their nails as they wait to see July sales and the full impact the stock market crash really had,” comments an executive of a major automaker. China’s state-backed auto industry body also announced it slashed by more than 50 percent its 2015 overall sales goal because of the stock market rout and major consultancy firms also showed the intricate correlations between money invested in stocks and sliding auto sales.

Via Reuters