After a bumper year in 2009 for China's auto makers, worries are proliferating that a pothole-filled path lies ahead.
Auto sales across the country grew 28.35 percent year on year to reach 1.44 million units in May, much slower than 34.61 percent in April. On a monthly basis, the May sales dropped a hefty 7.5 percent, said the China Association of Automobile Manufacturers.
The May figure brought total sales during the first five months to 7.6 million units, up 53 percent from a year earlier.
China's auto market flourished last year as policy initiatives helped put cars within reach of many consumers for the first time. The buying rush even left many carmakers scrambling to expand their production capacities to prevent consumers from fleeing to rival companies.
"The auto boom seems to be losing some fizz as the generous incentives have brought most potential buyers to the table, leaving little room for growth this year," said Zhao Hang, Director of the China Automotive Technology & Research Center.
This year buyers must pay a 7.5-percent tax for purchases of small-capacity cars instead of the 5-percent rate of 2009, though still less than the normal rate of 10 percent.
Hu Maoyuan, Chairman of Shanghai Automotive Industry Corp., predicted that the year-on-year growth might dip into negative territory later in 2010.
But the prospect may not be as dim as expected, said Qin Xuwen, a senior analyst with Shanghai-based Orient Securities Co. Ltd.
There are still strong pent-up demands in smaller cities and the promotional offers will also provide an effective cushion, said Qin. |