Chinese dealers are struggling with the rising number of unsold cars that’s threatening to deepen price cuts. On the same time, China’s home prices fell in a record number of cities last month adding to signs of slowing growth in the world’s second-largest economy.
Out of 70 major cities tracked by the government, 43 registered month-on-month falls in house prices last month, although that number was less than the 46 cities recorded in March.
Prices were unchanged in 24 cities in April while only three cities saw price rises, the National Bureau of Statistics said in a statement.
On the same time, new car sales last month totaled 1.27 million units. Even if this number represent positive year-on-year growth of 12.46 percent, they are still 12.46 percent lower than March’s results, signifying that the current downward trend in the market has yet to reside.
China’s car market had inventory of about 2.3 months during the first quarter, compared with two months’ of inventory a year earlier, Soh Weiming, the executive vice-president at VW China, said in Beijing yesterday.
“Unsold cars are crowding dealer lots in cities from Guangzhou in the south to Xi’an to the west,” Su Hui, vice president of the auto market division at the state-backed China Automobile Dealers Association said in a phone interview yesterday from Beijing.
“It’s like a contagious disease that will spread.”
Average prices of cars produced in China have fallen for three straight months as rising gasoline costs deter purchases.
Investor concerns about the downside risks in China’s economy have grown since data showed that growth in real estate investment slowed in April to a single-digit rate for the first time since the global financial crisis, adding to a flurry of other weaker-than-expected economic data.