China car sales up 48% on stimulus
China’s passenger-vehicle sales rose 48 percent in June, the biggest jump since February 2006, as government stimulus spending spurred a revival in the world’s third-largest economy.
Chinese motorists bought 872,900 cars, sport-utility vehicles and other passenger vehicles last month, the China Association of Automobile Manufacturers said in a statement today. Overall auto sales, including buses and trucks, rose 36 percent to 1.14 million.
A 4 trillion yuan ($585 billion) economic package has helped China surpass the U.S. as the world’s largest auto market this year and boosted sales for companies from General Motors Corp. to Alcoa Inc. The country is “a positive force” that will help drive growth as the world emerges from the global recession, billionaire George Soros said yesterday.
“China’s downward slide is clearly over,” said Wang Qingtao, an analyst at First Capital Securities Co. in Shenzhen. “There is also huge natural demand for vehicles, which will continue to drive the industry for years to come.”
The trade group raised its full-year vehicle sales forecast to more than 11 million from 10.2 million previously. First-half sales jumped 18 percent to 6.1 million after the government cut some retail taxes and handed out vehicle subsidies in rural areas to spur demand.
The Chinese auto group is “cautiously optimistic” about the industry in the second half, it said.
SAIC Motor Corp., the country’s biggest automaker, rose 2.9 percent to 18.00 yuan at 11:14 a.m. in Shanghai trading. The stock has more than tripled this year, compared with a 69 percent increase for the Shanghai Composite Index. Dongfeng Motor Group Co., the largest Hong Kong-listed automaker, rose 0.5 percent to HK$6.73. It’s more than doubled this year.
U.S. vehicle sales plunged 35 percent in the first half to 4.8 million. Sales slowed to an annual rate of 9.69 million cars and light trucks in June, according to Autodata Corp.
China’s passenger-vehicle sales climbed 26 percent to 4.53 million in the first half, while commercial-vehicle sales fell 0.5 percent to 1.57 million, the Chinese association said. The government acted to boost auto demand after sales dropped in five of the six months ended January.
“Given the low monthly sales numbers late last year we may continue to see surging sales growth in the following months,” Wang said.
Rising auto sales add to evidence that China’s economy may have recovered from a slowdown in the beginning of the year. New loans rose almost fivefold in June from a year earlier to 1.53 trillion yuan, the central bank said on its Web site yesterday.
Domestic carmakers have struggled to turn the surging demand into higher profits because of rising competition. Combined profit at the country’s top 19 automakers fell 9.9 percent in the first five months, while revenue declined 2.3 percent, according to the association. During the period, eight automakers boosted profit, eight reported declines and three had losses, it added.
GM, the largest overseas automaker in China, boosted first- half sales 38 percent to 814,442 vehicles, as government subsidies spurred demand for its low-cost minivans. Hyundai Motor Co.’s Chinese venture increased sales 56 percent to 257,003, according to partner Beijing Automotive Industry Holding Co.
Alcoa, the largest U.S. aluminum producer, expects government stimulus spending in China and the U.S. to boost metal demand enough to help the company start generating cash again, Chief Executive Officer Klaus Kleinfeld said yesterday.
Carmakers use aluminum for components including engine blocks, as well as for some stamped parts and body panels.