Chinese auto market is cooling down – sales down 3% in February – forecast image

Even if the demand for steel for automobiles in China may be higher than last year, it appears that in the first two months of 2012 the world’s biggest car market is 3 percent down according to five analysts surveyed by Bloomberg.

If true, this will be the biggest drop since 2005 when they fell 8.9 percent.

Last month, total sales fell 26.39 percent year on year to 1.39 million units the China Association of Automobile Manufacturers said, pointing to fewer working days last month and the high comparative base in 2011.

But even before the holiday, auto sales were slowing in China after Beijing rolled back sales incentives and some cities imposed tough restrictions on car numbers to ease chronic traffic congestion and pollution.

“The days of China’s vehicle sales going through the roof are over,” said Huang Wenlong, a Hong Kong-based analyst with BOC International Holdings Ltd.

“I don’t think the overall economic situation is that optimistic.”

“I think sales in 2012 will be about the same as last year, or perhaps even worse,” said Zhang Xin, an analyst at Guotai Jun’an Securities, in Beijing.

China overtook the United States as the world’s biggest auto market in 2009 and has also become the growth engine for global luxury models, as the gleaming showrooms on Jinbao Street testify.

Delivery growth slowed from the 32 percent rate in 2010, after China withdrew a two-year package of tax breaks and rebates.

In addition, Chinese Premier Wen Jiabao cut his nation’s 2012 growth target to an eight-year low of 7.5 percent and made boosting consumer demand the year’s first priority.