The country’s stock market has more than doubled in the past twelve months and consumers are now growing weary of big-ticket buys such as cars as the economy is slowing to the lowest level since the 1990s.
Instead, they have started being attracted by the recent rally, with the equities surge being the latest factor in line to lower automotive sales in the world’s largest auto market. Sales in May hit their lowest growth level in at least two years. And the sales slowdown is believed to have been even faster if global automakers from GM to VW AG had not decided to lower prices and boost incentives. With larger discounts, automakers are also bringing a host of other incentives – from subsidized insurance, zero down payment, interest-free financing to better trade-in offers, says Sanford C. Bernstein. Even as GM lowered prices of 40 models across the Buick, Chevrolet and Cadillac brands, the May sales were lower by 4 percent than during the same period last year – with China, its largest global market, outshined by the rally at home, where it soared three percent. On the other hand, the Chinese automakers – which were losing ground fast in recent years – have staged a comeback and have jumped from being the last option among strained consumers to companies that ride the global wave of growth within the sport utility vehicle segment.
Great Wall Motor, China’s biggest sport-utility vehicle manufacturer has shined the most, having its sales last month jump 26 percent from the same period last year. Deliveries at Geely Automobile, the parent company of Sweden’s Volvo, were also very close, soaring 25 percent year-over-year. The local manufacturers have jumped the gun in the SUV segment, delivering affordable alternatives to the models sold by foreign brands.