Chinese Auto Sales Weaken Sharply In March After Tax Rise

Growth in China's auto sales plunged in March as demand for SUVs weakened and purchases of sedans contracted.

Growth in China's auto sales plunged in March as demand for SUVs weakened and purchases of sedans contracted, an industry group reported Tuesday.

Sales of cars, minivans and SUVs in the biggest market by number of vehicles sold rose 1.7 percent from a year earlier, according to the China Association of Automobile Manufacturers. That was down from 6.3 percent growth in the first two months of the year.

Total vehicle sales, including trucks and buses, rose 3 percent to 2.5 million.

Auto demand was forecast to cool after Beijing raised a sales tax Jan. 1, but the March decline was unexpectedly sharp. Forecasters expect sales growth in mid-single digits this year, down from last year's 15 percent.

A steady decline in sales growth is squeezing global brands that look to China's crowded market to drive revenue and newer local brands that are expanding abroad.

Sales of SUVs, which are shoring up revenue for automakers as demand in other segments plunges, rose 19.6 percent from a year earlier to 832,300. Still, that was down from 21.6 percent growth in January-February.

Sales of sedans shrank 4.9 percent to 990,000 units, down from 3.8 percent growth in January-February.

In the year to date, overall market growth slowed to 4.6 percent, down 2.1 percentage points from a year earlier, according to CAAM. It said March exports rose 23.8 percent to 70,000 units.

Chinese drivers bought a total of 24.4 million vehicles last year after a 10 percent sales tax on small-engine vehicles was cut by half. Part of that was restored in January, raising the tax from 5 percent to 7.5 percent.

—General Motors Co. said sales of GM-brand vehicles by the company and its Chinese partners rose 16 percent to 345,448. It said SUV deliveries rose 45 percent and Cadillac sales gained 63 percent.

—Ford Motor Co.'s luxury unit, Lincoln, said first-quarter sales rose 114 percent to 11,731 vehicles.

—Nissan Motor Co., the most popular Japanese brand in China, said March sales rose 9 percent over a year ago to 120,106 vehicles. It said year-to-date sales were up 5.3 percent to 314,347.

—Toyota Motor Co. said sales rose 11.2 percent to 112,400 units. Sales for the first three months were up 10.2 percent at 296,000.

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