Carmakers see little impact from China's fuel hike

Automobile makers said on Friday they did not expect any major impact on sales in China after Beijing unexpectedly hiked retail fuel prices by up to 18 percent, its sharpest ever one-off rise.

"The hike may restrain purchases of automobiles in the short run," said Zhu Linjie, spokesman of Honda Motor Co (7267.T: Quote, Profile, Research) in China. "But from a long-term perspective, there would not be a huge impact on our total sales."

The Japanese car maker sold 410,000 vehicles in China last year and is expecting sales to rise to 490,000 in 2008, and is not planning to adjust that forecast, said Zhu.

High fuel efficiency vehicles would be more popular, he said.

Xu Changming, an auto industry analyst with the State Information Center, said the impact from the latest rise of less than one yuan per litre would be minimal, but continued price rises would eventually slow automobile sales.

"The key is the expectations for future price hikes," Xu said. Owners of low-end cars would be more affected than others, as they are more cost-sensitive, he said.

"Current fuel prices are not the decisive factor in buying cars," said an official at Shenyang Brilliance Jinbei Automobile, who requested anonymity because she was not authorised to speak to the media.

People depend on cars for their business and families, and those outweigh the added cost of fuel, she said.

The 16.7 percent climb in gasoline takes the pump rate to about 75 U.S. cents a litre, while diesel prices were raised 18 percent. China's domestic prices have doubled since 2003, while the price of crude oil has more than quadrupled.