China July Auto Sales Gain 10.5% as Dealers Offer Discounts

China’s passenger-vehicle sales rose 10.5 percent in July as automakers increased production and dealerships offered discounts to clear inventory.

Wholesale deliveries of cars, multipurpose and sport utility vehicles climbed to 1.24 million units last month, according to the state-backed China Association of Automobile Manufacturers today. That beat the median estimate of 1.22 million units by six analysts surveyed by Bloomberg News.

Enlarge image

A customer, center, looks at a General Motors Co. Cadillac SRX supports utility vehicle (SUV), while a Cadillac CTS vehicle is displayed at a dealership in Shanghai. Photographer: Tomohiro Ohsumi/Bloomberg

“There is an element of push from automakers,” said Ole Hui, a Hong Kong-based analyst with Mizuho Financial Group Inc. (8411) “They have all increased capacity and therefore have the incentive to push for more volumes and use more discounting.”

Ford Motor Co. (F), PSA Peugeot Citroen (UG) and Volvo Cars are among automakers that have opened assembly plants in China this year. Companies are stepping up production to cater to demand in the world’s largest vehicle market, where sales are projected to exceed 20 million units this year and 30 million by the end of the decade, according to association estimates.

An index tracking vehicle inventory levels in China fell to 53.2 in July from 56.1 a month earlier, remaining above the 50-point mark that demarcates a “reasonable” level of stockpile, according to the China Automobile Dealers Association this week.

Dealers are introducing discounts and holding promotions including for group purchases to reduce stockpiles, the trade group said.

Vehicle Restrictions

Total sales of vehicles, including buses and trucks, gained 9.9 percent to 1.52 million units last month, the association said. In the first seven months of the year, 12.3 million vehicles were delivered, putting sales on track to exceed the 20 million units estimated by the association.

Obstacles to growth are sprouting. Two cities, Tianjin and Wuhan, are considering vehicle purchase restrictions to reduce pollution and alleviate traffic congestion. Four cities, including Beijing and Shanghai, already have vehicle ownership curbs.

China’s auto association is firmly opposed to the “simple method” of vehicle purchase curbs to reduce air pollution, secretary general Dong Yang said in a briefing in Beijing.

Sales of SUVs, the fastest-growing segment in the first half of this year, rose 45 percent to 235,000 units. Sedan deliveries gained 7 percent to 840,400 vehicles.

The Ford Focus was the best-selling sedan last month, with Great Wall Motor Co. (2333)’s Haval line remaining the nation’s top-selling SUV.

U.S. automakers gained market share versus Japanese brands, which continued to falter in China 10 months after nationwide protests broke out over Japan’s nationalization of a group of uninhabited islands in the East China Sea.

GM, the biggest foreign automaker in China, said sales in the country rose 11 percent to 221,580 units last month, led by demand for Buick cars. At Ford Motor Co., sales climbed 71 percent to 72,834 units in July. Toyota Motor Corp. (7203) and Honda Motor Co. (7267) both reported declines in China sales last month.

To contact Bloomberg News staff for this story: Alexandra Ho in Shanghai ataho113@bloomberg.net; Penny Peng in Beijing at ppeng18@bloomberg.net