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September sales drop points to possible zero growth

Similar to 2008, the year of global financial crisis, there was no “Golden September” in 2012.

Unlike many years in the past when “Golden September and Silver October” brought about the highest monthly sales with significant growths year-on-year, automobile sales in September this year dropped  1.75 percent compared to the same month in 2011, to just under 1.62 million units.

The poor performance in September was described by China Association of Automobile Manufacturers (CAAM), which releases monthly output and sales data, as “unsatisfactory.”

This was the first monthly negative growth since February in both total and passenger vehicles. Total automobile sales in January-September were up 3.37 percent year-on-year, lower than the January-August sales growth of 4.1 percent.

The September negative growth was attributed by CAAM to the plunging sales of Japanese carmakers since the outbreak of violent anti-Japan protests in many Chinese cities over a disputed island. Sales of Japanese cars assembled in China dropped more than 40 percent in September. Toyota, Honda, Nissan and Mazda announced earlier this week that their September sales dropped 49, 40, 35 and 35 percent respectively.

The territorial dispute is expected to continue in the remainder of the year, which is bound to continue to affect output and sales as well as imports of Japanese vehicles.

But the fundamental market trend of reduced demand will continue as China faces increasing problems of energy consumption, environmental protection, urban congestion and restrictions of vehicle registration. With reduced business days in October due to the week-long National Day holiday break, output and sales in October are expected to be in the negative again.  

Although sales in the last two months of the year may pick up growth due to end-of-the-year manufacturer efforts, continued declining sales of Japanese brands may very well affect the annual total sales number, leading to a possible zero growth in 2012.

Total automobile demand for 2012 is likely to remain at 2011’s level of 18.5 million units.

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