China’s auto sales fall 13% in July

Chinese automobile sales slowed in July month-on-month as weaker economic growth, together with purchase controls in some cities, discouraged buying.

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Sales of all automobiles, including passenger cars and commercial vehicles, fell by 12.6% from June to 1.38 million units, according to data from the China Assn of Automobile Manufacturers (CAAM).

This level is still 8.2 % higher than a year ago, however.

July’s fall in sales contrasts with gains of 9.9% and 16% in June and May respectively.

The purchase limit in some cities, brought in as a method to control traffic congestion, is becoming an important factor affecting automobile purchases. Cities adopting the controls include Guangzhou and Beijing.

The cancellation of tax incentives for small cars, which had stimulated the high growth in China’s car market in 2009 and 2010, has also contributed to the recent decline in sales.

Despite the fall in July, the car market is still healthy, according to the China Passenger Car Assn (CPCA).

Sales of passenger cars should improve and see positive growth in August or September, when there will be a surge in buying before China’s National Day holiday, CPCA said.

The association also estimates the economic slowdown should ease in the third quarter as the effects of Beijing’s fresh small stimulus package in May, and other measures to boost the economy, begin to bear fruit.

Steel consumption from the Chinese automotive sector is about 40 million tpy, an analyst in Shanghai estimated.

The sharp decreases in steel prices since the middle of April coincided with the slowdown in auto sales.

Any improvement in the automotive sector later in August should help boost steel demand and prices.

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