Chinese consumers fearful of the slowing economy and harassed by the stock market rout extended the slowdown in the world’s largest auto market in July, with retail sales sliding 2.5 percent.
The tally was the worst for passenger vehicles over the past 17 months as demand was not reignited by the higher discounts from the automakers. Retail sales regressed 2.5 percent to 1.3 million autos, the slowest rate since February 2014, according to the China Passenger Car Association. A separate figure tally from the China Association of Automobile Manufacturers showed the overall passenger-vehicle deliveries dropped 6.6 percent, again a 17-month low. Global brands have been bracing for the slumping sales in China as the economy has slowed its advance to a 25-years low and the stock market issues have impacted consumer confidence. The foreign automakers also have more competition from the more affordable local manufacturers, which caught the trend towards sport utility vehicles and crossovers.
“International automakers’ cash flow will be impacted, no doubt about it,” comments Janet Lewis, an auto analyst at Macquarie Group Ltd, about the recent decision to devalue the country’s currency, diminishing repatriated returns from multinational automakers. “The U.S. automakers would stand to lose the most, because they’re the strong currency.” Meanwhile, the sliding currency will naturally favor the local manufacturers, with Chery Automobile Co., China’s largest vehicle exporter, claiming the move would see it shipments jump 20 percent throughout the year.