BEIJING -- China passenger car sales remained moribund in October. But some models saw sales surge, belying reports of oversupply in the overall market.
Total production in October fell sharply, indicating automakers are adapting to the slower sales.
Sales in October fell 1.27 percent to 169,304 units compared to the same month in 2003, according to the China Association of Automobile Manufacturers. Production in October fell 16.6 percent from a year earlier to 140,272 units.
Sales for the first 10 months of this year rose 18.1 percent to 1.85 million units. Production during the same period rose 14.4 percent to 1.86 million units.
"The same factors we have talked about for the past five months are keeping sales slow," said Yale Zhang, head of the Shanghai office of market forecaster CSM Asia. "The slowing economy with less government investment, slower lending from banks and frequent price cuts continue to keep consumers away."
China's central government, concerned that the economy was overheating, has discouraged bank lending and slowed approval for investment. Consumer sentiment has also turned more pessimistic.
Chinese consumers are famously price sensitive, and will delay buying a car for months if they think the price will go down. In the cutthroat China market, it probably will. Even newly-launched models frequently cut prices quickly.
PSA Peugeot Citroen dropped the price of the three versions of the Peugeot 307 sedan made at Dongfeng-Peugeot-Citroen Automobile Co by an average 6.67 percent just eight months after the model was launched in China.
A popular Chinese-language auto magazine this month lists 20 models ranging from the $3,961 Changan Suzuki Alto to the $42,270 domestically-made BMW 325i. All have had price cuts in the last year; the price of many has dropped twice. The magazine indicates whether to buy the car now or wait, based on the likelihood of a price cut occurring soon.
Another important, but less frequently mentioned, factor in the sales slowdown is the paucity of new model launches this year, Zhang said. Chinese buyers tend to flock to the newest model on the market.
The Toyota Corolla and Peugeot 307 sedans are the only two high-volume models from well-known makers launched so far this year. In 2003, the Honda Accord, the Honda Fit, the Buick Excelle and Regal, Hyundai Elantra, and Mazda M6 all launched.
Most models that sold well in October were relatively new.
Sales at Beijing Hyundai shot up 220.3 percent in October to 16,750, pushed by sales of the Elantra sedan launched in late 2003.
Even repositioning a model helped. Sales at Volkswagen's FAW-VW joint venture rose 16.55 percent in October, boosted by a 37.9 percent rise in sales of the Golf hatchback. Though one of VW's best selling models in Europe, the Golf sold poorly in China initially because Volkswagen positioned it as a business car. When VW lowered the price and repositioned it as a family car sales began to climb.