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Car sales slow in China, at least a little

Boom time: Rolls-Royce's newest showroom in China.

New car sales finally slow in China, but not at the top end and not like in the US

General News logo31 Oct 2008

CHINA’S new-car market may have finally followed the troubled US industry by slowing for the second consecutive month in September, but that hasn’t stopped massive investment continuing to take place at both ends of the country’s automotive sector.

Toyota this week broke ground on its seventh factory in China, just as US car-makers announced unprecedented production, workforce and development cutbacks, and while Australia awaits the federal government’s new car industry master plan, which is expected to green-light vehicle import tariff reductions that the Japanese giant has already warned will threaten the viability of its sole Australian manufacturing operation.

Like all car plants in China, Toyota’s newest factory is a joint-venture (again with its FAW Group Corporation partner), which in this case will manufacture up to 100,000 Corollas annually for the local market.

It is based in Changchun, the capital of Jilin province in north-eastern China, but despite a ground-breaking ceremony being held on October 27, no completion date has been announced.

Toyota, whose Chinese-built vehicles are sold almost exclusively in China, hopes to sell 700,000 vehicles there this year – another step closer to its near-term goal of 1.01 million vehicles and well up on the 499,000 vehicles Toyota sold in China last year.

At the other end of the motoring spectrum, Lamborghini yesterday announced it will establish a regional sales office in China for the first time, as part of the Italian luxury performance car-maker’s “global development of strategic markets”.

Due to be operational from early 2009 in Beijing, the capital of city of the People’s Republic of China, Automobili Lamborghini China is expected to lift local sales by more than 180 per cent this year to 80 vehicles – up from 28 sold last year by four dealers in Shanghai, Guangzhou, Beijing and Hong Kong.

Two further Lamborghini dealers will soon be opened in Chengdu and Qingdao, with more to follow, as part of the famed Sant´Agata Bolognese company’s plans to establish an equitable three-way global sales split between Asia, Europe and North America.

“China has the strongest dynamics of change to undoubtedly become the leading economy in the world,” said the President and CEO of Automobili Lamborghini SpA, Stephan Winkelmann yesterday (October 30).

“The development of wealth and the developing ‘savoir-vivre’ in China makes it one of the pivotal markets for Lamborghini’s future growth. The decision to establish a branch in China illustrates our dedication to opening the potential of this market for Lamborghini.” Former Fiat Powertrain Technologies and Iveco Motors Shanghai operative, Eginardo Bertoli, has been appointed as country manager for Lamborghini in China and will report to Enrico Maffeo, director of worldwide sales and customer service in Italy Meanwhile, Rolls-Royce also provided a further glimpse of the personal wealth now present in China by opening its sixth showroom in greater China last month.

Officially opened on September 10 by Rolls-Royce Motor Cars CEO Tom Purves, the new 400-metre showroom in Hangzhou joins existing R-R retail outlets in Beijing, Chengdu, Guangzhou, Hong Kong and Shanghai.

“This latest milestone is the first of several showroom openings which we announced in our Asia-Pacific expansion plan at AutoChina 2008 in Beijing, earlier this year,” said Mr Purves.

The opening of India’s second Rolls-Royce dealership two days later on September 12 brought the number of R-R outlets to 82 worldwide. The Rolls-Royce brand officially returned to India in 2005 before sales rose 57 per cent last year, but the smaller new RR4-codenamed sedan (due to emerge in 2010) is expected to significantly accelerate that growth.

To the end of August, Rolls-Royce increased its global sales by 52 per cent – slightly more than the growth achieved last year in China, which is now the world’s third-largest market for the hallowed British brand behind the US and UK.

Overall new-car sales have slowed in China, but it is still narrowing the gap to the US.

According to industry researcher Autodata, about 965,000 new cars and light trucks were sold in the US during September - down from 1.31 million in September 2007 and the first sub-million sales month in the US since February 1993.

Last month saw US sales slump by 34.5 per cent at Ford, 32.8 per cent at Chrysler, 15.6 per cent at GM and 32.3 per cent at Toyota – its worst decline in the US for 20 years. Toyota sold 144,260 vehicles in September (almost 70,000 fewer than a year ago), while Honda’s US sales dropped 24 per cent and Nissan’s fell by 37 per cent.

As a result, total US sales are down 26.6 per cent this year to the end of September and the US market’s seasonally adjusted annualised sales rate (SAAR) stands at 12.5 million – the slowest since the 1990-91 recession and down from an all-time sales record of 17.4 million in 2005.

In contrast, despite the second consecutive month of slightly softer sales there (September passenger car sales dropped 1.44 per cent to 552,800, after August sales shrank by 6.24 per cent), China’s new vehicle sales in the first nine months of 2008 have increased by 12 per cent, to 7.23 million.

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