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ECONOMY
Weekly Watch> WEEKLY WATCH NO. 16, 2011> ECONOMY
UPDATED: April 18, 2011 NO. 16 APRIL 21, 2011
Auto Gloom
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After a year of breakneck growth, China's auto market is losing steam.

Auto sales across the nation totaled 1.828 million units in March, up 5.36 percent year on year, compared with growth of 56 percent in the same period last year, said the China Association of Automobile Manufacturers (CAAM).

The March output also stood at 1.827 million units, moderately rising 5.34 percent from the previous year.

March has historically been a peak period for car sales in China, so the March data were beyond expectations, said the CAAM.

The association attributed the slowdown to the end of policy incentives and new limits on car purchases in Beijing.

The government this year scaled back supportive measures, including a favorable purchase tax for smaller cars, subsidies to rural buyers and an old car replacement program.

Rising oil prices and the devastating earthquake in Japan disrupted global supplies of auto parts.

How the disaster in Japan will impact China's auto industry has yet to be assessed, but the ripple effect should not be underestimated, said CAAM.

"Many automakers are likely to experience a decline in profits this year, and some may even struggle to make ends meet," said Dong Yang, Secretary General of the CAAM.

"The consolation is that the difficulties could provide a catalyst for the industry to press ahead with branding and technological innovation," he said.



 
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