Published on : Oct 15, 2015
With the stock market steadying in China last month, the car market has recovered mildly from a three-month decline. Industry analysts have pointed out that small-car sales would be boosted in the next few months with the recently announced tax break. However, the car manufacturers and dealers are still reeling under pressure from the slump in prices. According to the state-backed China Association of Automobile Manufacturers, in September, the sales of passenger cars were increased by 3.3% compared to last year. A total of 1.75 million vehicles were sold last month. The industry group has further mentioned that the combined sales of passenger and commercial vehicles increased by 2.1% to around 2 million vehicles.
According to John Zeng, the managing director at LMC Automotive, the stabilization of stock market, coupled with purchase-tax cut has played a role in bringing back the car market to the growth path. The 10% purchase-tax was reduced to half on cars with engines smaller than 1.6 litres. Industry data reveals that the small cars constitute more than 60% of the country’s car market. The stock market in China plummeted 45% from mid-June to August. With a number of government initiatives, the market stabilized in September. Consumer surveys have revealed that a majority of prospective car buyers stayed away from buying new cars owing to the slump in stock market.
China is a major market for the global car manufacturers such as BMW, Volkswagen, and General Motors. Though the car manufacturers are still witnessing a slowdown this year, customers coming back to the market sounds positive. Dealers are also witnessing a modest rise in the number of footfalls. According to Mark Fields, the Chief Executive of Ford Motor Co., the Chinese automotive market looks very promising even though the percentage growth in new-car sales has slowed down