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People's Daily Online>>China Business

Auto sales drop amid sluggish market

By Li Xiaoshu (Global Times)

09:32, April 10, 2012

Japanese automaker Honda Motor Co said Monday that its joint ventures in China sold 148,082 vehicles in the first quarter of 2012, 10.6 percent lower than the same period of last year, despite an increase in sales in March by 11.6 percent year-on-year to 65,416 units.

The decline signals a slowdown in the world's largest auto market, and has raised concerns among global automakers counting on China sales to rev up global growth, insiders and analysts said Monday.

"Almost all of Honda's models witnessed slumping sales due to a strategic withdrawal on expansion in China since the 2008 financial crisis and slower rollout of new products tailored for the Chinese consumers," Yu Jianliang, an independent auto analyst, told the Global Times Monday.

"Honda's Chinese partners who are more familiar with the local buying culture and market conditions are kept in a disadvantaged position, which made the joint ventures increasingly inactive and unproductive," Yu noted.

Besides, Honda is also suffering from quality problems that have affected consumer confidence, according to Zhang Xin, an auto analyst with Shanghai-based Guotai Jun'an Securities.

Honda will recall more than 24,000 CR-V sport utility vehicles in China beginning Thursday due to a wiring problem that could prevent the cars' low beam headlights from working.

"The sales performance so far could point to a tough year ahead for the carmaker," Zhang told the Global Times Monday.

China's vehicle sales this year will probably miss their 8 percent growth forecast as the slowing economy and rising fuel costs curb buying, according to Gu Xianghua, deputy secretary-general of the China Association of Automobile Manufacturers.

"The slowing economy will make it difficult to secure loans for commercial vehicles, while restrictions on car ownership in cities like Beijing, and car ownership costs such as fuel and parking fees are on the rise," Gu told the Global Times Monday.

"All these factors will make it difficult for China's car sales to meet even a 5 percent growth target," Gu said.

Another troubling sign comes from Toyota. In March, the company's sales in China were up just 2.2 percent from a year earlier to about 86,000 vehicles, spokesman Takanori Yokoi said last Wednesday. That took sales for the first three months to about 211,500 vehicles, up 1.8 percent.

The Japanese company said it has recovered from the impact of the earthquake and tsunami that hit Japan 12 months ago.

Toyota is holding to a goal of selling 1 million vehicles in 2012, a gain of at least 13 percent, but its sales for 2011 rose only 4.4 percent to 883,000 vehicles, the slowest pace in at least seven years after natural disasters disrupted output and the removal of tax breaks dented demand.

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