Clouds looming over China’s auto sales? image

The blistering sales in the world’s largest auto market have shown early signs of cooling down in recent months, but the trouble could be even deeper in one country that has a very particular business model.

Foreign automakers, which have constantly snatched market share from domestic producers in recent years (even if they need to set up joint-ventures with them to share profits), have been massively hit this year by Chinese regulators with anti-monopoly probes. Subsequently, many of them, including Toyota, Honda, Chrysler, BMW, Audi and Mercedes-Benz, decide to adjust prices (down) on vehicle spare parts and even some models.

Another source of concern is that the world’s second-biggest economy is also seeing a decreasing trend, with the auto industry hampered by some interesting trends: local innovation in technology and design is very slow, there is increased competition on aftermarket parts and used cars and new regulations are stricter when it comes to pollution and traffic congestion.

According to the latest sales report coming from the China Association of Automobile Manufacturers, new car deliveries last month only rose by 3% – the smallest increase in the past 19 months. Also, for the January to September period, the overall sales have climbed 7% – that compares to a 14% jump in all of 2013.

Via Automotive News