In April prices for imported vehicles in China have dropped the most in the past five months, as demand for luxury cars dropped on the government’s campaign to cut lavish spending by public servants.
Last month, the average price for imported vehicles fell 3.4% compared with April 2012, while the price for the locally made passenger cars increased 0.2%, according to Cheng Xiaodong, head of auto-price monitoring at the National Development and Reform Commission.
“It’s a special period of time as demand for high-end imported cars is being curbed,” Cheng said in a telephone interview today. “Prices of imported cars may continue to slide and demand will mainly come from private buyers in the future.”
Demand in China for luxury cars, manufactured outside the country, has dropped after President Xi Jinping began a campaign to cut extravagant spending by officials and companies owned by the state. Beginning this month luxury cars are forbidden to have military number plates, an attempt to reinforce discipline and protect the armed forces’ image.
Analysts predict that China luxury auto sales will surpass the US by 2016 and equal Western Europe by 2020, due to increasing incomes. Demand for China luxury vehicles is expected to more than double by 2020, reaching 3 million units from 1.25 million units sold in 2012. According to McKinsey & Co. deliveries of luxury vehicles might reach 2.25 million by 2016.