Car makers post sales gains in China

BEIJING—Auto sales in China
continued to rise in June, though at a slower pace than in previous months,
which some analysts said could mean a cooling market later this year.

Sales by Toyota Motor Corp., which has been hurt by a quality troubles this
year, rose a relatively modest 7.7 per cent in June from a year earlier to
60,900 vehicles, a company spokesman in Beijing said Monday. The growth rate
for the month was much slower than earlier this year, as the company’s
first-half sales totaled 362,300 vehicles, up 27 per cent from a year earlier.

On Monday, China’s General
Administration of Quality Supervision, Inspection and Quarantine said the
Japanese auto maker will recall 5,791 imported Lexus luxury vehicles in China
starting July 19 as part of a global recall to repair problems that could cause
engines to stall.

Motor Co.’s June China sales rose 30 per cent to 58,151 vehicles, according to
a company spokesman in Beijing. The Japanese company’s first-half sales totaled
330,573 vehicles, up 47 per cent.

Analysts said the
small-car-purchase tax cut and other stimulus policies implemented amid the
global financial crisis seem to have pulled purchases forward, resulting in the
recent slowdown in sales.

“Sales aren’t all that
bad,” said Toyota spokesman Hitoshi Yokoyama, though he added that orders
and traffic at dealerships have slowed.

Auto retailers in major markets
such as Beijing, Shanghai and Chengdu are reporting having an increasingly tough
time selling cars, analysts said. Buyers previously paid premiums to get their
hands on hot-selling cars, but now some dealers say they are offering discounts
and other incentives to boost sales.

Yale Zhang, a Shanghai-based
analyst with consulting firm IHS Automotive, said some dealers in markets such
as Chengdu are already holding four weeks’ to six weeks’ worth of inventory,
which Mr. Zhang said points to the “possibility that auto sales in China
may be headed for a cool-down period.”

On Friday, General Motors Co. of
the U.S. said sales by its joint ventures in China rose 23 per cent in June to
176,486 vehicles. For the first half, sales rose 49 per cent to 1,209,138

In the
face of concerns about a significant slowdown in sales later this year, Beijing
announced a plan last month to provide subsidies of 3,000 yuan ($440) a car for
purchases of certain fuel-efficient vehicles with 1.6-liter or smaller engines.

The subsidy plan comes after
China reversed plummeting auto sales last year with measures such as a
purchase-tax cut for smaller-engine vehicles. Those policies continued this
year with some modifications. The purchase-tax cut, for example, was reinstated
at 7.5 per cent, down from the 10 per cent tax cut offered last year.

Auto-industry executives said the
new subsidies effectively reinstate the full tax cut.

Ford Motor Co. of
the U.S. said Monday it sold a record 301,524 vehicles in China in the first
half, up 53 per cent because of robust demand for fuel-efficient cars and rapid
growth at its commercial-vehicle venture.

Changan Ford Mazda Automobile
Co., a three-way joint venture between Ford, Changan Automobile (Group) Co. of
China and Mazda
Motor Corp. of Japan, had first-half sales of 205,563
vehicles, up 46 per cent, Ford said. The company didn’t provide sales data for

said first-half sales of its Ford Fiesta compact model more than doubled to
38,669 vehicles. Ford introduced the Fiesta in China last year.


Toyota sales rose 7.7 per cent.