Auto Sales Slowing Down in China
    2012-05-24 09:07:20         Web Editor: Mao

Nowadays, fewer people are buying cars in China. The overall sales volume dropped by 1.3 percent in the first quarter of this year compared to the same period last year, a decrease for the first time in recent years. Does this mean that China has hit an industry plateau, or is this just temporary?

Let's find out more with our reporter Liu Min.

A 1.3 percent drop in auto sales in China may not be particularly alarming data, but compared with the 30 percent growth in 2009 and 2010, back when China had one of the most promising auto industries, it seems a bit gloomy.

More than three fifths of the current listed auto company market reports from the first quarter of this year have shown a rapid plummet in sales. For example, the ambitious BYD reported a 90 percent drop in net profits, and China's largest automaker First Automobile Works, or FAW, saw a 103 percent decrease in the same category.

Sales manager Xi Chunhong from a Beijing-based dealership says she's witnessed the sharp decrease in the current market.

"Back in the 2009 and 2010, we could sell as many as 220 to 230 per month, so the high sales volume brought us higher income every month. Those were good times. But now we are experiencing a sluggish period. 60 to 80 is the average sales volume every month during the first three months."

Not only are the mainstream auto models facing slow development, but new energy cars are also taking a hit. According to statistics released by the China Auto Industry Association, the production and sale of new energy cars only takes up 0.2 percent of the entire industry in the first quarter of this year.
Back in June 2010, China started to boost sales of new energy cars by providing subsidies. The trailblazing program took place in several cities such as Shanghai, Changchun, Shenzhen, Hangzhou and Hefei. Shenzhen Pengcheng Taxi Company is the first cab company in China using electric cars as taxis. Currently, the BYD E6 models are priced at 300 thousand yuan each. Even with a huge amount of subsidies, the price of the model is still as much as 180 thousand yuan. Driver Luo Baodong says he highly doubts if such models will be able to compete.

"The price of the car is three times the non-electric ones, so the insurance expense is also very high, nine to ten thousand yuan per year. Plus, it is very inconvenient to recharge in the city since we only have one gas station to provide such a service. I doubt the car will be an easy sale for the average urbanite."

Also, the surging cost of owning a car has also curbed the sales. The crowded roads, higher parking fees and climbing fuel prices have given motorists a heavier burden. A driver surnamed Zhao from Tianjin says she's changed her mind about getting a new car.

"My monthly expenses on car maintenance are more than 150 yuan. The parking expenses used to be only two yuan per hour, but now it has increased to eight yuan at least. Many of my friends who drive much better cars also feel the pressure of these expenses and some are now taking the subway to work everyday. But even if you don't drive your car, you are still spending money on insurance and parking fees."

But automakers are still optimistic about the future. They predict that the next big boom will happen in middle and smaller cities, those with 500 thousand to two million people, and they will switch their strategy to focusing on developing cities rather than affluent areas.

For CRI, I'm Liu Min.


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