March 6, 2017 / 8:42 AM / a year ago

JAC Motor sees slower China auto market sales growth in 2017

BEIJING (Reuters) - China’s Anhui Jianghuai Automobile Group (JAC Motor) (600418.SS) expects slower growth in China’s vehicle sales this year as the world’s largest auto market nears saturation in demand, its Chairman, An Jin, told Reuters on Monday.

China’s auto market grew an unexpectedly strong 13.7 percent last year thanks to a tax cut on small-engined vehicles. The growth rate is expected to subside as the policy is rolled back this year and eliminated in 2018.

“Because China already has 28 million vehicles (in annual sales) and is extremely large, having another big increase is not very likely,” An said on the sidelines of China’s parliamentary session, to which he is a delegate. The annual meeting began on Sunday and ends March 15.

Global automakers General Motors (GM.N) and Toyota Motor Corp (7203.T) have reported falling sales in the first two months of 2017, while Nissan Motor Co (7201.T) posted single-digit growth. The automakers last month blamed the tax cut policy roll back and the Chinese New Year holiday for weak sales.

In September, JAC Motor signed a preliminary deal with Volkswagen AG (VOWG_p.DE) to explore making electric vehicles in a new joint venture. [nL3N1BJ2A7]

JAC Motor’s An said that talks between the two companies are continuing at a mutually agreed pace but are “not yet at a completely successful stage,” adding that the tie-up has not received final approval.

“We are continuing to make great efforts,” he said of the talks, declining to say when a final agreement might be made.

    The joint venture would be VW’s third in China. Foreign automakers are required to form joint ventures to manufacture domestically and are generally limited to two passenger car ventures.

    VW has said that it hopes to conclude talks in the first half of this year and deliver its first car with JAC by 2018. [nL4N1F93J7]

    The government’s openness to the tie-up is related to it being focused on battery electric and plug-in hybrid vehicles, An said.

    Reporting by Jake Spring; Editing by Muralikumar Anantharaman

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