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Automakers miss sales targets

By Ji Beibei (Global Times)

08:27, July 24, 2012

About 90 percent of China's automakers failed to achieve their sales targets for the first half of the year, which analysts said may lead to price wars in the second half, though the auto industry growth for 2012 is expected to be stable compared with last year.

"Price wars may start in second- and third-tier cities in the second half of the year, in view of rising inventory," Li Haiying, an auto analyst with Anbound Consulting, told the Global Times on Monday.

China Business News (CBN) reported Monday that a recent survey by gasgoo.com, China's largest automotive B2B marketplace, showed that some 90 percent of China's 24 major passenger vehicle makers failed to meet half of their annual sales targets by the end of June.

Only three companies, Dongfeng Motor Corporation, Shanghai General Motors Co and FAW-Volkswagen Automotive Co met their half-year sales goals. FAW Car Co and Beijing Benz Automotive Co only achieved 30 percent of their annual goals.

Greatwall Motor Co sold a total of 279,300 vehicles in the first half of the year, CBN said, a 17 percent year-on-year growth, yet only 46.6 percent of its annual goal of 600,000 vehicles.

"Many producers, expecting a stimulating policy to be released this year, were optimistic about the market at the beginning of the year and set their goals a bit high," Li told the Global Times.

With rising sales pressure, Dongfeng Peugeot lowered their sales target for 2012 in June from 240,000 to 230,000 vehicles, Beijing News reported last month.

But some other automakers decided to leave their targets unchanged. "Sales were worse than expected, but currently we have no plan to cut targets," a public relations staff with Honda Motor (China) Investment Co, told the Global Times Monday.

In the face of accumulating sales targets, analysts expect producers to lower prices in the coming months.

"Pressure to clear stocks to meet targets and a chain reaction set by luxury brands which have seen prices plummet since May will weigh down prices in the second half of the year," Jia Xinguang, an independent auto analyst, told the Global Times Monday.

Besides, there is also expectation that more cities will impose vehicle purchase restrictions with their vehicle numbers exceeding 2 million this year, Jia said.

China released a series of stimulus measures in 2009, including tax breaks for small cars, which led to a 46 percent year-on-year growth in auto sales for 2009 and 32 percent for 2010. However, sales plunged significantly in 2011 when the policies expired.

Despite a slowdown in growth, Du Fangci, assistant secretary-general of the China Association of Automobile Manufacturers, told the Global Times that the auto industry is expected to see a steady growth in the next five to 10 years in view of huge market potential.

"However, some domestic passenger car makers with low capital base and limited investment in research and development may be phased out of the market in the next three to five years," Du said.

The CAAM said earlier that the market share of domestic passenger cars in May slipped 3.3 percent year-on-year.

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