Auto Sales Growth Slows to a Trickle

Passenger Car Sales Growth Slowed Sharply to 7.4% in 2008, Hitting Top Brands Like GM, VW, Ford and Toyota

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VW is one of the multinational car companies hit by slowing sales growth in China
VW is one of the multinational car companies hit by slowing sales growth in China

BEIJING ( -- China is not a safe haven for global automakers. The world's second largest car market is still showing growth, which is good news for an industry racked by layoffs and bailouts in the U.S. and Europe. But the car sales data announced in China over the past week paints a grim picture.

Overall passenger car sales growth in China slowed to 7.4% in 2008, according to the China Passenger Car Association, a steep drop from annual gains of more than 20% during the previous three years.

Car companies sold 6.43 million vehicles last year in the mainland. The drop mirrors a similar slowdown in China's GDP, which fell below 10% for the first time in five years in the last half of 2008.

Another group, the China Association of Automobile Manufacturers, said car sales growth dropped to 6.7% last year.

Sales for GM's JV fell 7%
Domestic sales of General Motors Corp. and its joint ventures rose 6.1% to a record 1,094,561 units in 2008. But sales by its flagship joint venture in China, Shanghai General Motors Co., fell 7% to 445,709 units last year. The joint venture manufactures Chevrolet, Buick, and Cadillac cars in China.

The second largest American automaker in the mainland, Ford Motor Co., reported sales of 306,306 units in China last year, including passenger car sales of 204,334 units by Ford Motor's passenger car joint-venture, Changan Ford Mazda Automobile (CFMA). Jiangling Motors Corp., a local company that manufactures Ford's commercial cars such as the Ford Transit in China, reached sales of 95,171 units.

Nervous consumers are holding off buying new cars
Nervous consumers are holding off buying new cars Credit: Normandy Madden
China's fast growing middle class has been driving demand. Although the economy is still growing, nervous consumers are holding back on big purchases, which is hitting the auto and property sectors particularly hard, including companies like Ford. The company has started to focus on smaller cars, such as the Fiesta, launched late last year. Ford also rolled out an upgraded version of Focus, a mass-market family sedan for young couples, in 2008.

Despite the current market challenges, Ford "remains committed" to China, said Robert Graziano, the company's president-CEO, China in Chongqing. The company "took significant steps in 2008 to further enhance the value of the Ford brand through a deeper understanding of the Chinese consumer's vehicle wants and needs."

VW brand up 8.2%
Volkswagen Group sold 1,024,008 vehicles in mainland China, Hong Kong and Macau last year, including imports and cars manufactured by its two joint ventures, Shanghai Volkswagen and FAW-Volkswagen. VW's 2008 sales set a record for the German company in the mainland and grew by 12.5% over 2007, when the auto group sold 910,491 cars in Greater China.

Sales of the Volkswagen brand grew to 844,491 in 2008, however, a mere 8.2% increase over 2007, including 12,649 imported vehicles. Audi delivered 119,598 vehicles, a 17.3% increase, including 13,640 imported units. Skoda sold 59,284 cars, up 117%. On the luxury end, VW Group sold 518 Bentley cars, and 117 Lamborghinis. New models launched by VW last year included Volkswagen New Bora and Lavida, Audi A4L and Skoda Fabia.
Passenger car sales growth in China slowed to 7.4% in 2008
Passenger car sales growth in China slowed to 7.4% in 2008
As a sponsor of the 2008 Olympic Games, VW "strengthened Volkswagen, Audi and Skoda brand image in China. Despite the negative development of the market in the second half of the year, we achieved the best result in the history of Volkswagen in China ever," said Beijing-based Winfried Vahland, president-CEO of the Volkswagen Group in China. VW "will continue investing heavily in China to rebuild the customer confidence."

BMW, one of the most popular luxury car companies in China, sold 65,822 cars in the mainland last year, a 28% increase over 51,588 units sold in 2007. But BMW's performance in 2008 was well below the 42% sales increase it saw in 2007, compared to the previous year.

Sales of BMW brands, including the 3 Series and 5 Series cars, rose 27% to 62,688 units. Sales of Minis grew 43% to 3,134 units. In Greater China, including mainland China, Macau, Taiwan and Hong Kong, BMW sold 75,355 vehicles in 2008, up 23% from 2007.

Toyota Motor Corp sold about 585,000 vehicles in China last year, up 17% but well under its 62% growth rate in 2007 over 2006. Honda Motor's sales rose 11.7% to 473,297 units last year, down from growth of 30.6% the previous year.

Chinese domestic car companies are also feeling the slowdown in sales. Chery Automobile Co. sold 356,000 units last year, including exports of 130,000 vehicles. That figure is down 6.56% from sales of 381,000 in 2007, and well below its sales target last year of 480,000.

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