China 2008 sales of 10 mln vehicles hard to reach

Shanghai, September 17 (Gasgoo.com) China vehicle sales may fall short of a sales forecast of 10 million units this year as consumers' buying power are undermined by slowing economic growth and the slumping stock market, said xinhuanet.com yesterday, citing an industry association.

The latest data from China Association of Automobile Manufacturers (CAAM) show that China's vehicle sales of 629,000 units in August dropped by 5.53% from July, down 6.34% from the same period of last year, the first year-on-year (y/y) sales decrease since 2006. There were 615,500 vehicles produced in China last month, down 15.9% m/m, down 3.5% y/y.

"It is possible that we can't make it to 10 million this year," a senior official of CAAM said to reporters. "The economic fundamentals have impacts on all aspects including vehicle sales." China's benchmark CSI 300 Index has fallen by more than 60% this year as economic growth has slowed for four consecutive quarters.

To reach the forecast of 10 million vehicles this year, automakers in China need to sell an average 830,000 units per month. In the first eight months, they only reached or exceeded the amount in April, May and June. Earlier this year, the auto industry association made the 10-million-unit sales forecast for 2008.

Vehicle sales in China, the world's second-largest vehicle market, rose about fivefold over the past decade to 8.79 million units in 2007. But vehicle sales in the China market have been sliding since the sales peak in March this year.