A week ago we warned of the odd build up in inventories in GM’s parking lots in China. It appears those warning were spot on as WSJ reports, China’s new car sales recorded the first year-over-year decline in more than two years in June, as slowing economic growth and falling stock markets hit the world’s largest auto market. “2015 will be an off-year for the Chinese car market,” said Dong Yang, a vice president for the auto manufacturers’ association, and we note auto dealers are seeing orders cancelled at a frenetic pace as it appears stock margin calls are draining the liquidity car-buyers once had.
China sold 1.51 million passenger vehicles last month, down 3.4% from a year earlier, the China Association of Automobile Manufacturers said Friday. That compares with a 1.2% year-over-year rise recorded in May and a 3.7% increase in April.
The performance was the worst since February 2013 when car sales fell 8.3% on-year during the weeklong Lunar New Year Holiday when car showrooms are closed. Stripping out the holiday factor, the last time China’s car market posted a decline was in September 2012, when a territorial dispute between Beijing and Tokyo over a group of uninhabited islands in the East China Sea hit demand for Japanese cars.
… also cut its growth forecast for China’s automobile market in 2015 to 3% from the previous 7%.
“2015 will be an off-year for the Chinese car market,” said Dong Yang, a vice president for the auto manufacturers’ association. He said the slowdown was caused by a confluence of factors including the cooling economy, increasing restrictions on car ownership to combat congestion and pollution and stock market volatility.
“Neither a bull market nor bear market does good to car sales. Our surveys of dealers show that visiting volumes to car showrooms dropped sharply in the first-half,” said Mr. Dong.
“The painful market adjustment currently under way is far from over,” he said.
* * *
As we noted previously, it appears there just is no more room to stuff inventories in its Shenyang, Lianing province parking lots (as China has become the new car graveyard over the last 3 years)
* * *
And finally, there is an even bigger problem…
- *CHINA PASSENGER CAR SALES HIT BY STOCK-MARKET ROUT, CUI SAYS
- *CHINESE CANCELLING CAR PURCHASES ON STOCKS ROUT, PCA’S CUI SAYS
They really better keep that massively inflated bubble of a stock market up or things are about to get much worse.