Total automobiles sales in 2011 are predicted to drop 10%

Shanghai January 12 (Gasgoo.com) Research on the 2011 automobile market has shown some pessimistic results. During yesterday's "December 2010 Automobile Market Information Research Forum," Research institute China Passenger Car Association (CPCA) said that this year's domestic automobile sales may show negative growth of over 10%.

"It is normal to see negative growth the first year after government policies have been phased out; positive growth meanwhile is abnormal," says general secretary Rao Da. "We must accept this fact and low future growth rates, otherwise market decisions may be unsuccessful."

Reports point out that various segments of the market may have different performances this year. MPVs, SUVs and imported vehicles are predicted to experience small growth. Small sedans and compacts, on the other hand, will experience negative growth due to phasing out of preferential policies, leading to a drop in sales of 2 million vehicles. Excessive consumption from 2009 to 2010 will cause a sales drop of 80,000 to 1 million vehicles.

Furthermore, rising oil prices, diminishing national economic growth, decrease in automobiles used for public service, municipal policies to reduce traffic pressure limiting automobile purchases as well as increasing vehicle taxes all have a strong influence on the automobile market, further decreasing sales volume.

When considering how phasing out these policies will effect consumption stimulated during the fourth quarter of 2010, CPCA predicts sales in the first and fourth quarters will show negative growth.

However, Mr. Rao points out that short-term negative growth can be beneficial to enterprise merging and acquisition as well as industry reorganization. At the same time, increased competition can aid improvement of both vehicle technology and quality as well as enterprise management standards.

According to statistics released by the CPCA, in 2010 domestic sales of passenger automobiles was 13.32 million vehicles, a 30.5% increase from the previous year, with SUV and MPV sales increasing the most (59.1% and 45.4% respectively.) Sales of sedans were under the average, increasing 23.6%.