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China auto market cools

In reverse: Honda has suffered its fourth straight month of sales declines in China where double-digit growth appears to be a memory for most.

Full-throttle auto market slows to cruise mode as China car sales ‘normalise’

General News logo6 Nov 2014

THE Chinese car market has retreated to single-digit growth this year, with some Japanese manufacturers bearing the brunt of the sales brakes in the world’s biggest motor market.

BMW chairman Norbert Reithofer this week said the Chinese market had normalised, meaning the end of runaway double-digit growth, possibly forever, as the giant market matures.

China’s automobile industry is forecasting 7.0 per cent auto sales growth this year – almost half of the 13.9 per cent climb last year when sales soared to almost 22 million.

Honda’s Chinese sales fell 5.8 per cent in October – its fourth straight month of year-on-year sales decline – causing it to downgrade its 2014 sales forecast for China from 900,000 vehicles to 800,000.

Nissan sales went down 9.0 per cent for the month, causing it to also trim its full-year sales target from 1.4 million to 1.27 million.

One of China’s biggest motor industry operators, General Motors, reported a modest 3.2 per cent increase in October sales compared with the same month last year.

Year to date, GM’s sales are up 10 per cent, to a record 2.8 million units, but clearly the rate of growth is cooling.

The slowing of the Chinese economy and tightening of air quality regulations that require caps on car registrations in many big cities are seen as the main culprits of the slower growth, and while the expansion is still handsome by western standards, no one is predicting a return to industry-wide double digit growth.

According to Mr Reithofer, the Chinese market is normalising and becoming more like large, mature markets in the US and Europe.

“The high double-digit growth rates are over,” he said.

BMW has been one of the winners in China so far this year, with sales up 18 per cent.

Toyota sales are also up by a handy 13.3 per cent, but from a relatively low base last year when Japanese car companies were impacted by fallout from political tensions between Japan and China over disputed territories.

Japan’s biggest motor company is still playing catch-up in China against European and American rivals. This year, it hopes to crack the million-vehicle barrier for the first time – a target it had hoped to reach in 2010, before the Chinese backlash against Japanese products set in.

On the bright side, Toyota depends less on China than several other brands, especially Volkswagen, GM and Nissan, and will thus be less affected by any slowdown.

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