China car sales fall for first time in two years as economy cools

Car sales in China dipped 0.1 per cent in May from a year earlier, marking the first decline in more than two years amid a rapid slowdown in the world's biggest car market. After two consecutive years of frantic expansion, car sales in China settled into a subdued growth pattern at the beginning of 2011, with sales this year up a mere 6.1 per cent, having surged by almost two-thirds in 2010. Japanese manufacturers, suffering from production disruptions in the aftermath of the devastating earthquake and tsunami, continue to report weak China sales. The Chinese market may continue to soften in the summer months, a traditionally slack season for car sales, followed by a moderate rebound in autumn, industry observers say. "June and July have never been the best months for auto sales and flat growth would be the best scenario this year," said Jenny Gu, JD Power's senior market analyst based in Shanghai. "Demand may pick up a bit in autumn, but it's unlikely to be anything close to the surge in 2009 and 2010." September and October are the so-called "gold and silver" months for Chinese car dealers, a time when those hoping to get behind the wheels at the best leisure travel season of the year typically flock to showrooms. Monthly declines Dong Yang, secretary general of the China Association of Automobile Manufacturers (CAAM), said overall 2011 vehicle sales growth was likely to fall short of the previous forecast of 10-15 per cent. "Auto sales won't fall every month in the rest of the year, but we will certainly see more monthly declines ahead," he told reporters. At a Chevrolet dealer in Shanghai, sales have been lukewarm, despite market expectations of a cut-back on Beijing's 3,000 yuan (Dh1,689) subsidies for buyers of fuel-efficient cars.