China: used car sales hit the skids, not out of gas

Although used car sales are still increasing on a year-on-year basis in the first half, month-on-month sales have slowed down for a fourth straight month partly because of seasonal factors and consumers holding off on purchases.

More than 1.71 million were sold in the first half, up 14.06 percent year-on-year, the China Automobile Dealers Association (CADA) said Friday. The trading volume climbed 11.27 percent to 77.2 billion yuan ($11.42 billion) over the same period.

Unit sales in June dipped 0.95 percent from May to 302,900, with trading volume dropping 10.50 percent month on month to 13.38 billion yuan ($1.98 billion). Prices of all segments dropped from May. Average price of sedans plunged 16.90 percent from May to 47,200 yuan ($6,973.99).

Month-on-month drops in unit sales in Northwest and South China are the worst, 8.63 percent and 4.57 percent lower from May respectively.

China's auto sales grew by 46 percent to 13.6 million units last year. But after two month of rapid increases in 2010; the world largest auto market began to see month-on-month decrease since March.

Like new auto sales, the used car market has suffered for four straight months. Analysts and industry insiders think China's auto market is returning to normal after overheating in 2009.

Shen Rong, deputy secretary of CADA, attributed the downturn to the weakening new car market and seasonal factors.

Sales will continue to fall in July and August, but negative year-on-year growth will not likely happen, Shen told the Global Times Sunday.

Wang Meng, market director with Beijing Used Vehicle Trading Market, told the Global Times that sales won't see obvious improvements until new car prices drop to a level that can be accepted by consumers.