Auto industry expected to grow faster in H2

13:52, July 18, 2011      

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Photo taken on Nov. 5, 2010 shows an electric vehicle made by BYD Company Limited, at the 25th World Battery, Hybrid and Fuel Cell Electric Vehicle Symposium &Exposition in Shenzhen, south China's Guangdong Province. (Xinhua/Qin Haishi)

The growth of China's auto sector will quicken in the second half of the year, according to top auto makers and experts at an auto expo in the northeastern province of Jilin.

The government may implement favorable policies to boost the market and ensure sound development after the growth rate of both auto sales and output slowed in the first half of the year, said Yu Tiantian, researcher with Jilin North Automobile Industry Information Development Co., Ltd., while attending the eighth China Changchun Automobile Expo, on Saturday.

"The government is studying new polices to boost auto consumption," Yu said.

Auto sales in the first half of the year reached 9.23 million units, up 3.25 percent year-on-year. But the growth rate was 29 percentage points lower than that of last year. The output only rose 2.48 percent to 9.16 million units during the period, according to data from the China Association of Automobile Manufacturers (CAAM).

The decrease, caused by the removal of tax incentives for car purchases, rising fuel costs, purchase limits in some cities and tight money supply, will be eased later this year, said Chen Fangming, director of Public Relations with Zhejiang Geely Holding Group.

"What policy the government adopts has become a dominating factor for the ups and downs in the auto market," Chen said.

Industry heavyweights and experts attending the auto show said they were optimistic about future growth.

"Despite the drop in sales during the first half, we are still confident about the market as the government moves to adjust its policies," said Xu Yulin, vice president with the Guangzhou-based GAC Motor.

The government has introduced a slew of measures recently that are aimed to help small and middle-sized enterprises (SMEs) get finance.

"It's good news for the intermediate and senior passenger vehicle market because a considerable share of its targeted consumers are SME owners," Yu said.

Further, the government announced in June it would introduce measures to lower transportation costs by reducing relevant taxes and road tolls, Yu noted.

Meanwhile, the car purchase limit implemented in Beijing, which has led to shrinking sales in the local market, was unlikely to be adopted in any large scale way in other regions, according to the CAAM.

Jiang Jun, professor with Jilin Academy of Social Sciences, shared the view, saying that any intent to institute a similar policy in other parts of the country was unlikely to get approval.

Beijing launched a car-quota system on Jan. 1, limiting only 240,000 new cars to be registered in the city this year, compared with the 800,000 new automobiles that took to the streets in 2010.

According to Yu, the rising consumer prices, which are discouraging people from spending generally, will start to decline later this year as the country's tightening measures gradually take effect.

"Consumers will become more confident once the inflation is contained," said Yu, who expected the country's consumer price index (CPI), the main gauge of inflation, to peak during June and July.

According to Jiang, the country's current oil shortage will significantly be eased as the Ministry of Finance starting levying zero import tariffs on diesel oil and jet fuel starting July, following the International Energy Agency's strategic oil release, a move aiming at easing supply disruptions in Libya.

"Stable oil prices will buoy consumer confidence," Jiang said, adding that the auto exports, which are estimated to increase 50 percent year-on-year in the first half of the year, will continue to expand at such a rate in the second half.

China's auto sales, predicted to grow around 6 percent this year, surged more than 32 percent year-on-year to hit 18.06 million last year, making the country the world's largest auto market for the second year in a row.

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