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Abrupt China car sales slowdown

By Alysha Webb, Automotive News correspondentSHANGHAI-Sales of passenger cars in China were too hot not to cool down, but few expected it to happen so fast. Now, in response to the sharp slowdown, car makers there have begun cutting production plans. Last month, new-car sales rose only 2.2 percent to 164 852 units compared with June 2003. That’s a striking deceleration given the way the market has been running. “Everybody expected a slowdown, it’s just that it’s happened very suddenly,” says Ashvin Chotai, director of Asian Automotive Industry Research, Global Insight in London. New-car sales in China have been soaring since early 2002. That year they rose to 1.26 million units, 62 percent up on the previous year. In 2003, sales surged another 70 percent to more than 2 million units. Sales continued to boom through the early months of 2004, but year-on-year growth slipped to 10 percent in May and fell further last month. Nevertheless, the car market grew 29.4 percent in the first half to 1.12 million units, according to the China Passenger Car Market Association, an organization of car makers. China’s two largest car makers, Shanghai General Motors and Shanghai Volkswagen are limiting production this month. Shanghai GM is closed from Thursday, 15 July 15 to 25 July. Suppliers were told it is to save power in the midst of a shortage. A GM China spokesperson says the shutdown is for routine maintenance. Meanwhile, Shanghai VW is working some half days to save power. Shanghai faced similar power shortages last summer, and neither company stopped production in the face of roaring demand.”

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