While automakers tried to jumpstart the dwindling car sales in China last month by offering bigger incentives, consumers opted to defer acquisitions or rather invest their reserves in the recent world largest stock-market rally.
According to Cui Dongshu, secretary-general of the Chinese Passenger Car Association, new vehicle registrations in China last month equaled to the “worst May ever” when it comes to percentage increases – year-over-year the market was up 3.8 percent to a total of 1.57 million autos. “The stock market is like a pump that sucked up all the money,” commented Cui. “People are not buying cars, no matter how big the incentives. People want their money in the stock market.” The Shanghai Composite, which has more than doubled over the past twelve months is just the latest in a series of setbacks for the auto industry, which has been impacted by the numerous restrictions on sales imposed by an ever growing number of cities that seek to curb congestion and pollution, as well as the overall economical slowdown. Back in April, the state-backed China Association of Automobile Manufacturers predicted the new vehicle deliveries in China might grow by no more than seven percent, as the economic rise is forecasted to be the worst since the 1990s.
The industry wide sales last month also masked the rising or diving fortunes of global and local automakers. Once squeezed for market share by the foreign carmakers, the local manufacturers have now retaliated and are making inroads with affordable sport utility vehicles. In term, the global rivals have tried to bridge the gap by increasing incentives.