China July car sales grow at faster pace on discounts

China’s passenger-car sales grew at a faster pace in July as the government introduced subsidies for fuel-efficient models and dealers offered discounts to clear inventories in the world’s biggest automobile market.

Retail sales of cars, sport-utility vehicles and multipurpose vehicles rose 15.4 percent from a year earlier to 822,300 last month, the China Automotive Technology & Research Center said today. That compared with 10.9 percent growth in June, 25 percent in May and 34 percent in April, when the center began releasing statistics.

Auto dealers stepped up incentives to lure customers after demand began growing at a slower pace in April amid higher inflation and easing economic expansion. The government also began offering subsidies of 3,000 yuan ($443) to promote purchases of fuel-efficient models. Rising inventories may lead to weaker sales growth in August, the center said in today’s statement.

“Despite dealers’ promotion efforts, monthly car sales may fall from year-earlier levels as early as September,” said Ricon Xia, an analyst at Daiwa Institute of Research in Hong Kong. “The abnormal car sales surge we had last year was caused by temporary policies.”

Vehicle inventories rose in July, pushing dealers to offer discounts. The average stockpile period, a measure of the time between car production and registration, lengthened to 58 days from 55 in June, according to the center. Domestic auto output exceeded sales by 1.29 million vehicles in the first half of this year, the center said on July 5.

Automaker Discounts

Automakers may join dealers in offering discounts in the fourth quarter, Cheng Xiaodong, an official with the National Development and Reform Commission, said on July 23. China’s car prices fell 1.2 percent in the first half from a year earlier, according to the agency.

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