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Chinese Car Sales Grow At Slowest Pace In 19 Months

Tyler Durden's picture




 

As Italy's Chrysler (yes, it belongs to Fiat now) resumes trading on the NYSE five years after it filed for bankruptcy, in a completely illiquid tape, on the day after the biggest weekly market rout in years, trading briefly above its $9 opening price before sliding just under...

... the real automotive news of the day comes neither from NY, nor Mahwah, NJ where the NYSE is located, nor from Italy, but from China - the place where all automakers have thrown their Hail Mary passes in the past year.

Alas the news is anything but good.

According to Bloomberg, China’s vehicle sales grew at the slowest pace in 19 months in September as demand for trucks and buses slumped with the weaker economy. Total vehicle sales, which include passenger and commercial vehicles, rose 2.5 percent from a year earlier to 1.98 million units, the China Association of Automobile Manufacturers said today. That was the slowest pace since February 2013.

Demand is slowing in the world’s largest auto market as the economy slows with declines in gauges for services and industrial production. The state-backed auto association cut its forecast for full-year vehicle sales in July as the economy showed little signs of improvement and more cities consider purchase restrictions.

 

The overall economic climate is a bit chilly so the individual sector is also impacted,” Dong Yang, the association’s secretary general, said at a briefing in Beijing today. “Even though the growth in August and September seems a bit slower, it is still in the normal range.”

 

Passenger-car sales in China rose 6.4 percent last month to 1.7 million units. Sales of commercial vehicles such as trucks and buses fell 16 percent, according to association data.

 

In July, the group lowered its projection for China vehicle sales growth to 8.3 percent, from a 10 percent prediction in January. Economists forecast China’s expansion this year will moderate to 7.3 percent, the slowest since 1990, and to 7 percent in 2015.

So how do US makers spin the tumble in demand? "Among foreign automakers, General Motors Co. which counts China as its largest market, said earlier this month that its sales in the country rose 15 percent in September. Toyota Motor Corp., the world’s largest carmaker, increased sales by 26 percent to 91,100 vehicles, while Nissan Motor Co. and Honda Motor Co. deliveries slumped 20 percent and 23 percent respectively during the month."

In other words, the wave of negative earnings preannouncement from the car makets is imminent.

 

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Mon, 10/13/2014 - 13:04 | 5324587 stinkhammer
stinkhammer's picture

0% financing forever; please just sign and take the car  - edward quince

Mon, 10/13/2014 - 15:49 | 5325415 El Oregonian
El Oregonian's picture

Going to hell in a 4 door yuan basket.

Mon, 10/13/2014 - 13:09 | 5324612 KnuckleDragger-X
KnuckleDragger-X's picture

You have to have a large enough middle class for it to be viable plus they have to be heavily marketed to convince the people they have to have a new car to keep up with the Jones's. Right now they are busy buying gold jewelry.

Mon, 10/13/2014 - 13:12 | 5324617 Infinite QE
Infinite QE's picture

Or Golden Visas to get themselves the hell out of ZioChina.....

Mon, 10/13/2014 - 15:02 | 5325159 Antifaschistische
Antifaschistische's picture

article misses the point....millions of Chinese could afford automobiles that currently do not have them.  However, have you been to China?  There's no place to park your car....so the only real solution is to build a ton of parking garages, or to start sprawling their cities like we do in America.  And the Chinese aren't stupid enough to do either one of t hose things.  So...auto's in China are nearing a saturation point.

I did the math on a comparably populated city in China and compared it to Houston.  The city in China consumed 1/40th the land mass of the Houston area.  Needless to say, Houston is 100% dependent on cheap oil/gas.  $8 gas would destroy 80% of Houston real estate and disposable income would get slaughtered.

So...the Chinese are doing the proper thing by limiting their auto purchases.  In Houston...we just spent $4+ billion (taxpayer dollars) for a 28 lane Freeway to the suburbs to SUBSIDIZE a) developers and b) the 40 mile one way commute to work.  So we're doing all the wrong things too.

Mon, 10/13/2014 - 15:04 | 5325169 Antifaschistische
Antifaschistische's picture

oh...and mass transit, does not work anywhere in the world with massive low population density urban sprawl.  American cities will be screwed IF we ever have high gas prices.

Mon, 10/13/2014 - 18:26 | 5326292 magnetosphere
magnetosphere's picture

excellent points.  my one quibble is the chinese car market has not saturated.  it is growing exponentially... at 2.5% / yr.  in 100 years that would be 23 million new cars / month or 280 million / yr.  obviously the car market will truly saturate long before any of this happens.

Mon, 10/13/2014 - 20:52 | 5326880 laomei
laomei's picture

Most definitely not saturated. What's happening is this however: Housing is cooling down due to several factors.  Beijing housing seems to have peaked for the most part, you can save and save and save, but upgrading your home is still out of reach, buying another home is even more out of reach for most.  So what to do with that $100k sitting there? Buy a nicer car.  In response to this, the domestic cars are in fact getting much better.

 

The real issues here are, as stated, parking (the city cores were never designed for cars, parking is difficult to say the least), and horrible fucking drivers.  I drive in this traffic every single day, I'm good at it, but fuck me people drive like idiots.  Drivers who just do whatever they feel like with zero regard to the rest of traffic.  Playing on their fucking phones and they jump out into traffic, or sit there in the left lane going 30 instead of the posted 100 (or the expected 130).  If people would just stop driving like idiots, there would be virtually no traffic jams.

Mon, 10/13/2014 - 18:12 | 5326229 Angry Plant
Angry Plant's picture

You also need roads and cities that can acomodate everyone owning a car. The average american houses car garage stil has more room in it then the average chinese house. Front yards are non existent and streets are one and half lanes wide.

Mon, 10/13/2014 - 13:08 | 5324613 darteaus
darteaus's picture

Sales hit a Great Wall?

Mon, 10/13/2014 - 13:17 | 5324645 Bell's 2 hearted
Bell's 2 hearted's picture

another BRIC in(to) the Wall?

Mon, 10/13/2014 - 13:15 | 5324634 Bell's 2 hearted
Bell's 2 hearted's picture

china coming in for a wheels up landing ... FUBAR'd europe (iirc) their biggest export market

Mon, 10/13/2014 - 13:16 | 5324641 Kirk2NCC1701
Kirk2NCC1701's picture

Call it a hunch, but if aggressive financing, and cheap Saudi or Russian oil don't work for Chinese consumers, it means they expect a shit storm to be on its way.

Can we interest you in a baby tank then?  "A Million tanks in the ME can't be wrong", you know.  Even the Wahhabist nutjobs will have to admit that "The customer is always right", when faced with these odds.

Mon, 10/13/2014 - 13:46 | 5324747 Spungo
Spungo's picture

Chrysler still exists? I don't know a single person who owns one.

Mon, 10/13/2014 - 14:28 | 5324957 ebworthen
ebworthen's picture

And owned by Fiat, a double curse.

Mon, 10/13/2014 - 19:36 | 5326593 JuliaS
JuliaS's picture

I do own a 1992 Chrysler. 3.0L Mitsubishi V6 engine. The car's heavier than an SUV. Cuts through snow like a hot knife though butter. A relative owned a Chrysler until hers got stolen last year. A neighbor bought one a week ago almost for free. Now spends all his time in the garage, fixing it up.

They're alright for people who consider car fixing their hobby (myself included). Everything's out in the open. Drill, weld or solder anything you want. A spare part is typically just a junk yard away. Schematics are easy to find online.

Mon, 10/13/2014 - 14:14 | 5324853 ebworthen
ebworthen's picture

2.5% growth rate in car sales = people who can afford it only grew 2.5%

This means that the overall China growth rate is not 7%, but more like 1% or 0%.

Mon, 10/13/2014 - 15:11 | 5325199 darteaus
darteaus's picture

Real Headline:

Chinese increase their purchase of physical gold and stop buying expensive crap that immediately drops in value.

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