BEIJING -- Passenger car sales remained moribund in China in October. Production fell sharply in the month as automakers adapted to slower sales.
October sales fell 1.27 percent to 169,304 units compared with the year-ago month, according to the China Association of Automobile Manufacturers. Production in October fell 16.6 percent to 140,272 units.
Sales for the first 10 months rose 18.1 percent to 1.85 million units. Production for January through October 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," says 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. Besides the obvious impact of lighter credit, consumer sentiment also has 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 prices on newly launched models frequently are cut quickly.
PSA/Peugeot-Citroen dropped the price of the three versions of the Peugeot 307 sedan made at Dongfeng Peugeot Citroen Automobile Co. Ltd. by an average 6.7 percent just eight months after the model was launched in China.
Another important but less frequently mentioned factor in the sales slowdown is the paucity of new-model launches this year, Zhang says.
Chinese buyers tend to flock to the newest model on the market.
Most models that sold well in October were all 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.
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