Vehicle sales slump in China, fanning global fears

Passenger-vehicle sales in China fell for a second month in a row in September, dropping 1.4% from a year earlier to 552,800 vehicles and heightening worries about a demand slowdown.

Sales of passenger vehicles in the January-September period rose 11.4% to 5.1 million units, the China Association of Automobile Manufacturers said.

The September decline in passenger-vehicle sales suggests full-year sales growth could fall to a single-digit percentage, said CSM Worldwide analyst Yale Zhang. That would be down from a rise of 21.8% in 2007.

"Most people had expected sales to recover in September, but that didn't happen," Mr. Zhang said. "Consumer confidence is simply weak...People realize that China is part of the global economy."

The sales drop in China adds to the bad news for global auto makers, who had relied on sales in the country to offset weakness in mature markets.

In August, China's vehicle sales fell 6.3% from a year earlier -- the first decline in more than three years.

Industry observers had attributed the decline to the Olympic Games, held in Beijing that month, as well as to a softening economy.

September is usually a peak month for auto sales in China, as consumers typically buy vehicles ahead of the Golden Week holiday in October.

In September 2007, 561,000 passenger vehicles were sold in China, while 4.58 million were sold during the first nine months of 2007, according to the auto-manufacturing association.

Demand was particularly weak in coastal, export-oriented regions, Mr. Zhang said, referring to export-reliant Guangdong and Zhejiang provinces, which are the two biggest auto markets in China.

Volkswagen AG sold 772,783 vehicles in China from January to September, a 13% rise from the 683,012 sold a year earlier, the German company said Thursday. Sales rose about 30% in the same period of 2007.

Demand for Volkswagen's Audi luxury brand bolstered the parent company's sales. Audi vehicle sales in China rose 19% in the first nine months of 2008, while sales of Volkswagen-brand vehicles increased 7.5%.

That helped Volkswagen keep its position as the largest passenger-car maker in China by sales, even as its Jetta sedan lost its lead as the best-selling passenger car in China.

The Jetta slipped to No. 3 behind Honda Motor Co.'s Accord and General Motors Corp.'s Buick Excelle.

Volkswagen is targeting full-year sales growth of one million units, an increase of 9.8% from the 910,491 vehicles sold in 2007.

Ford Motor Co. underperformed the industry's growth, with January-September sales rising 7.1% to 240,879 vehicles from 224,849 a year earlier. Sales of Ford's passenger vehicles rose 6.8% to 165,383 from 154,818 a year earlier, the company said Friday.

Volkswagen and Ford didn't disclose sales for September.