Car Sales in China Disappoint in 2012, China Automobile Association Says

Auto sales growth in China, the world's biggest car market, fell short of expectations last year, an industry group said Friday, as the economy slowed and cities put limits on vehicle numbers.

Sales rose 4.3% year-on-year in 2012 to 19.31 million vehicles, the China Association of Automobile Manufacturers said, well below forecasts of 8%.

While the figure is up from 2.5% growth in 2011, when 18.51 million units were sold, it is a fraction of the explosive 32% rise seen in 2010.

Slowing domestic economic growth, limits on car numbers and a political row between China and Japan that hurt sales of Japanese-brand cars weighed on the Chinese auto market last year, analysts said.

Cap on Cars Hurt Sales

In July last year, China's booming southern city of Guangzhou capped the number of cars by limiting license plates, following in the footsteps of Beijing and Shanghai.

Klaus Paur, Shanghai-based global head of automotive for market research company Ipsos, said overall auto sales were hurt by a fall in commercial vehicles as China's economy slowed.

He estimated that limits on cars by cities concerned about pollution and congestion shaved one to two percentage points from sales growth of passenger cars.

Last year, China's sales of passenger cars alone rose 7.1% to 15.50 million vehicles, the association said in a statement on its website.

Demand Remains Healthy

"It's still a quite healthy demand for passenger vehicles," Paur told AFP. "Overall, this paints quite a good picture for development in the China market."

Japan's top three automakers – Nissan (IW 1000/26), Toyota (IW 1000/8) and Honda (IW 1000/23) -- said this month that annual sales in China fell last year due to a consumer boycott after Tokyo nationalized islands also claimed by China.

The association said Japanese brands -- not including imports -- accounted for 16.4% of total passenger car sales last year, down from a market share of 19.4% in 2011.

But other foreign auto makers have filled the gap, helped by stronger brand recognition than local players and perceptions of better quality.

GM Sets New Record in China

U.S. auto giant General Motors (IW 500/4) has tipped its full-year sales in China for 2012 to set a new record by surpassing the 2.55 million vehicles it sold in 2011.

Cui Dongshu, deputy secretary general of another industry group, the China Passenger Car Association, forecast passenger car sales would grow at least 10% this year.

"The environment will get better this year as the new leadership will likely announce fresh policies to stimulate the domestic economy, but there's also risk of more restrictions on car purchases," Cui told AFP.

Global management consulting firm McKinsey has forecast growth in China's passenger car market will slow to an average 8% annually from 2012 to 2020 as consumers' tastes change.

The Chinese passenger car market grew an average 24% annually between 2005 and 2011, it said in a report last November.

Copyright Agence France-Presse, 2013