Hyundai Says China Auto Sales Restrictions Might Hurt Vehicle Demand image

Hyundai expects the Chinese government to restrict auto sales in 8 more cities, affecting demand in the largest auto market in the world.

“China’s auto industry demand continued to expand in the past, even though four Chinese cities already limit car sales,” Hyundai Motor’s Chief Financial Officer Lee Won-hee said during a conference call.

Earlier this month China’s automakers’ association said that it might soon restrict auto sales in 8 more cities , part of the strategy to reduce pollution and traffic congestion. The government has already imposed new vehicle sales restrictions in Beijing, Shanghai, Guangzhou and Guiyang, as it limited the number of license plates and implemented lotteries and auctions to sell them.

Now 8 more cities might be added and Shi Jianhua, the auto association’s deputy secretary general, warned that these measures, if they will be implemented, will reduce auto sales by 400,000 units.

“We expect licensing restrictions to have limited impact on new car sales,” said Bob Socia, head of China operations for GM.

Automakers not only begin to turn their attention to smaller Chinese cities, but they also believe that the restrictive auto purchase strategy might be as ineffective in solving the congestion and air quality issues, as they might be in stemming overall auto sales.

Source: Reuters