China Plans to Become Global Auto Exporter Hits Wall image

China’s plans to become a global exporter have hit a wall as shipments have continued to drop over the past two months.

In June China exported 84, 400 vehicles, with almost one-fifth less compared with the same period last year, and after a drop of 16% in May. Exports continue to drop as many markets face political and economic difficulties. Still, auto sales in China last year increased 11%, a clear sign that the auto market is solid despite a slow economic increase.

According to the China Association of Automobile Manufacturers, Chinese automakers accounted for 38% of the passenger-vehicle sales in June, compared with a drop of 47% at the end of 2012. This means that foreign automaker continue to dominate the Chinese market, as domestic brands face a market flush with auto plants.

CLSA auto analyst Scott Laprise believes that automakers in China have turned to exports as they are not able to sell their vehicles at home. China has almost 140 domestic car makers. In June, auto sales in China reached 1.75 million units, with passenger vehicle sales up 9.3% to 1.4 million units. During the first six months of this year sales jumped 12% to 10.78 million units and passenger vehicles increased 14% to 8.67 million units.

“For Chinese car makers, the day in which they can grow exports at 50% or even higher has come to an end. The situation is more challenging,” said Dong Yang, executive vice chairman and secretary-general of CAAM.