UPDATE 1-China auto sales growth slows again in July

Thu Aug 9, 2012 3:34pm IST

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* Vehicle sales slowed further in July

* Car sales up 10.7 pct, commercial vehicles continue to decline

By Wan Xu and Norihiko Shirouzu

BEIJING, Aug 9 (Reuters) - Chinese demand for automobiles slowed further in July from the previous two months as an economic slowdown and weak consumer confidence weighed on sales.

Industry-wide sales, including passenger cars and commercial vehicles, rose 8.2 percent to 1.38 million last month from a year ago, according to data released on Thursday by the China Association of Automobile Manufacturers (CAAM).

That compares with relatively healthy gains of 9.9 percent and 16 percent in June and May, respectively, due in part to robust sales of new and redesigned models that hit the show rooms consecutively after the Beijing auto show in April.

Vehicle sales in the first seven months came to 11 million, up 3.6 percent from a year earlier.

Despite the slower growth, the auto association reiterated its annual forecast for overall auto sales to grow 5-8 percent this year.

Sales in China's auto market grew sharply in 2009 and 2010, but growth began to slow significantly last year and is continuing into this year.

"It's tougher this year, for the market is quite different now," said Sheng Ye, an analyst at industry consulting firm Ipsos. He noted that China's once-sizzling car market started to lose steam in 2011 after Beijing stripped away tax incentives for small cars.

Truck sales also plunged due to the slowing domestic economy and weak foreign trade.

In July, passenger car sales rose 10.7 percent to 1.12 million vehicles in July, according to CAAM.

Sales of commercial vehicles were down 1.6 percent last month to 259,200. Commercial vehicle sales -- trucks and buses -- have been on a steady year-on-year decline almost every month since March 2011.

CAAM's data reflect sales of vehicles from factories to dealers and thus should not be considered retail sales, but they give an indication of initial demand at the wholesale level.

Industry executives and analysts say some automakers, struggling to meet their sales targets for the year, have been pushing cars to their dealers.

Overall car inventory in the country stood at 2.2 million as of the end of June, rising sharply from 1.3 million at the beginning of the year, Ye Yongming, general manager of General Motor's flagship China car venture, was quoted as saying by local media.

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