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The Spring Chill

End-user sales of passenger vehicles in the first two weeks of March failed to pick up any momentum, according to Cui Dongshu, analyst with the China Passenger Car Association (CPCA).

Daily sales in the first week of March were down 4 percent year-on-year. The market seems to be confronted with a “spring chill,” writes Cui in his blog and “both OEMs and dealers are depressed, not knowing when the market would warm up.”

The Dragon seems to be still in hibernation in the Chinese new year and although total automobile sales in February were up 13 percent over those in January and 25 percent over the same month of 2011, the numbers do not represent any real growth in demand because this year’s weekly long Spring Festivals fell in January and last year’s in February. There were more output and sales because of the additional work week.

In the first two months of 2012, total sales of automobiles were down 6 percent year-on-year, to a total of 2.95 million units. Both wholesale and end-user sales of passenger vehicles were down compared to the same period in 2011.

CPCA secretary-general Rao Da believes that passenger vehicle sales in March are likely to be negative again compared with the same month in 2011. Although each has 23 working days, he said, March sales in 2011 included the release of hidden numbers from the previous year. Other factors that may shrink demand is the rising price of gasoline, urban restrictions on vehicle registrations, controlled demand of official fleets, and the possibilities of traffic congestion surcharges on vehicles in downtown areas of large metropolises.

It is highly likely that sales of both passenger and commercial vehicles in the first quarter of 2012 will be negative year-on-year. If this happens, the “spring chill” may affect China’s overall demand in 2012. The prediction by many that total output and sales of automobiles may see a growth between 5-10 percent may be overly optimistic.

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