A weakening local economy and increasing purchasing restrictions could put a hamper on automotive sales in China according to the analysts at LMC Automotive.
Just-Auto reports light vehicle sales in March 2014 — totalling 2.03 million — were lower than those in January and February, prompting a 10 percent decline in growth during Q1 2014 over the same period last year. In addition, momentum from Q4 2013 failed to carry over into the next quarter, as the selling rate peak of 23.3 million in the last two months of the previous year fell to an average of 23.1 million.
The cause of the peak, however, could throw sales into a roller coaster. Purchasing restrictions in cities such as Beijing, Tianjin and Hangzhou — enacted to help combat air pollution by selling a set number of license plates per year — stirred a wave of panic-buying during Q4 2013, and with the potential for more to come — especially if new restrictions come quickly — another wave of panic-buying could precede a sales slump, followed by another sales spike.
Amplifying this effect, China’s economy has been in a slump as of late, with yearly GDP growth dropping to 7.4 percent YoY Q1 2014 from 7.7 percent in the previous quarter. Manufacutring, sales and exports all declined, along with property prices in smaller cities. In response, the government plans to boost stimulus measures, though they may only be effective in the near-term as the nation’s investment-driven economy model approaches its limits.