China claimed the global sales crown for 2009 and will likely retain it for years, if not forever.
The Economic Monitoring Center of China National Bureau of Statistics and Sinotrust International Information & Consulting today said that even though the Chinese market was growing at a record 18-million unit rate for the first half of 2010, it can’t be sustained for the balance of the year.
Dealers are not optimistic about for the second half of the year, traditionally a slack sales period, and inventories have grown.
Still, record annual sales of 17 million are expected, a 25% increase from 2009.
There is an ongoing debate in China concerning what is a sustainable rate of growth in what is now by far the world’s largest auto market.
According to the survey conducted with automakers and dealers, the “cooling off” was caused by declining sales closing rates and the pressure from the increasing inventory.
Although still optimistic, most automakers are now cautious in making predictions the size of the market in the third quarter.
According to the survey, 69.2% of the entrepreneurs were optimistic about overall market demand in Q2, but the percentage drops to 21.4% when they are asked to predict aggregate market demand in Q3.
Sinotrust claims this shows a decline in confidence. In addition, 25.1% of the dealer managers report that their sales declined from 2010 Q1 and 30.8% of them believe the situation will deteriorate in Q3 because of the upcoming slow selling season.
At the beginning of 2010, the Chinese auto market grew in line with the rapid growth experienced in 2009, which was the result of Central Governments stimulus programs that lasted the whole year. It appears the Communist party wants to slow down growth rates in what has become an overheated economy.
According to China Association of Automobile Manufacturers, Chinese auto sales volume in the first half of 2010 was 9.02 million vehicles, up 47.67% compared with the same period last year.
However, the growth rate over the rest of 2010 will decline due to the drop in confidence, and because of the high comparative sales base in the second half of 2009.