Growth in China car sales set to slow in line with economy

City measures against air pollution likely to restrict availability of number plates

Slowdown: growth in China’s car market was 6 percent in January, a third of the rate seen in December. Photograph: Jason Lee/Reuters

Slowdown: growth in China’s car market was 6 percent in January, a third of the rate seen in December. Photograph: Jason Lee/Reuters

Wed, Feb 19, 2014, 01:00

Pollution-control measures and a government austerity campaign are having an impact on the number of cars sold in China, the world’s largest market, where growth is expected to slow in tandem with that of the broader economy.

On the face of it things don’t look so bad, especially when compared with Europe or the US. Total vehicle sales, including those of buses and trucks, climbed 6 per cent, to 2.2 million, last month. Deliveries in China will rise by up to 10 per cent this year, the government- backed China Association of Automobile Manufacturers said.

Rao Da, secretary-general of the China Passenger Car Association, said the January sales growth indicated that the sector would grow throughout 2014, after recovering from near stagnancy in 2011 and 2012.

But the car is being blamed for much of the pollution in China’s cities, and efforts to cut air pollution are focused on limiting the number of cars on the roads by restricting the availability of number plates.

Rao said panic buying would give sales a boost in the next few months. February figures would also be lifted by tighter government regulation of what qualifies as an official government car. “These will make more civil servants join the individual buyer group,” Rao said.

Government efforts to rein in excessive credit are hitting broader economic growth. According to some forecasts, China’s economy is expected to expand by 7.4 per cent this year, its slowest rate in 24 years. This will hit car sales too.

The overall car market grew 17.9 per cent in December last year and ended 2013 with a growth rate of 13.9 per cent.

This was always going to slip back in January because of the Chinese New Year holiday.

The China Association of Automobile Manufacturers last month said the market would likely grow 8-10 per cent this year. China’s top-selling overseas car maker, Volkswagen, said VW-brand sales in China and Hong Kong increased by nearly 14 per cent year on year in January, to 267,800 units. Audi, China’s bestselling luxury brand, saw an 18 per cent rise in January sales, to 44,526 units.

Car ownership is still low, at about 120 million vehicles for a population of more than 1.3 billion – fewer than 100 cars per 1,000 people. Europe and Japan have 600 cars per 1,000.

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