The ratio of small vehicles with engines 1.6 liters and smaller compared to overall passenger vehicles dropped below last year's average for a fifth straight month.
Overall, 1.24 million vehicles last month were sold, up 14.42 percent from a year earlier, but down 11.9 percent from June, figures from the China Association of Auto Manufacturers (CAAM) showed Monday. Auto sales growth from January to July slowed to 42.65 percent from 47.67 percent over the first six months.
In July, smaller cars accounted for only 65.38 percent of overall passenger vehicle sales, which totaled 946,200 units, declining 1.42 percentage points month-on-month and dropping below last year's average of 69.5 percent for five months in a row.
Likewise, the market of China-developed cars, most of which fit into the small car category, also declined.
A total of 377,700 self-developed passenger vehicles were sold last month, accounting for 39.92 percent of total passenger vehicles sales, a drop of 4.5 percentage points comparing with that of June. Unlike three in June, only one self-developed sedan, BYD's F3, made it into the month's top 10 best-selling sedans.
CAAM's executive vice chairman and secretary general Dong Yang said the impact of the green car subsidy program put in place in June on China's auto market hasn't had an effect.
The program provides 3,000 yuan ($443.37) per unit subsidy to 71 fuel-efficient models with engines 1.6 liters and smaller.
Dong said he is not sure whether the policy will overturn the downside market of small vehicles, but a series of more incentives will be rolled out in the fourth quarter to boost small vehicle sales.
Dong said earlier this year he had been worried about small vehicle sales since last December when the government lifted the sales tax from 5 percent to 7.5 percent for small vehicles.
Dong lifted Monday for the first time CAAM's sales forecast for the year to 16 million units from 15 million units.
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