Trade officials claim China's auto sales may increase by less than 5%, well below early forecasts of 8% for 2012.
Vehicle sales may struggle to meet early growth projections of 8% set by the China Association of Automobile Manufacturers (CAAM) and may dip below 5%, due to a “difficult” economic backdrop and rising fuel costs, says Gu Xianghua, deputy to the Secretary General. Demand for commercial vehicles would be the worst hit as mounting pessimism and high fuel prices drive consumers away from dealerships, Gu remarked.
China, now the world's largest automarket, has enjoyed a fivefold increase in auto sales over the last decade, but may have to accept that the slowing pace of the economy might stifle growth in domestic sales. CAAM data shows total retail and commercial sales contracted to 6% in the first two months, although the growing superpower may still reach its record-breaking target of 20 million units delivered this year.
Foreign luxury car makers have also been affected by slow sales, despite outperforming the overall market for the last two years. Mercedes Benz, Audi, BMW and AG have since introduced large discounts to entice consumers as competition intensifies and demand growth weakens.
Despite the general pessimism, February sales inexplicably went far above expectations, rising 24.5% year-on-year to 1.57 million units. Nonetheless, the brief boost was still short of CAAM targets set at the start of the year.