Car sales in China rose 2.6% in February from a year earlier, the slowest pace in 23 months, as a pre-holiday buying spree led to a subsequent drop-off in demand in the world's largest auto market.
The more subdued growth pattern is expected to extend into the coming months now that automakers are relying mostly on rational demand, not government tax incentives, to drive sales, industry observers say.
Many Chinese typically go on a buying spree ahead of the week-long Spring Festival holidays -- which ran from Feb 2 to Feb 8. Beijing's decision to strip away most of its incentives for the auto industry at the end of 2010 along with local governments' steps to tackle traffic congestion, also helped pull the brakes of the once sizzling market, other analysts say.
A few pessimists, such as Rao Da, head of the semi-official China Passenger Car Association, had even projected a more than 10% fall of auto sales for the full year.
As such, automakers, which have enjoyed an easy ride in China in the past two years, are now buckling for challenges ahead.
Mazda Motor Corp., Toyota Motor, Honda Motor and General Motors all reported a rare fall in their monthly sales in a country. Analysts blamed the decline on the holiday factor as well as a 55.3% jump in car sales in February 2010, which pushed up the comparative base.
A total of 967,200 sedans, sport utility vehicles and multi-purpose vehicles were sold in February nationwide, the China Association of Automobile Manufacturers said on Wednesday. That compared with 1.53 million units sold in January, up 16.2% from a year earlier, according to official data.
Last time China's monthly car sales fell below the one-million mark was in July 2010, a typical auto-selling month.
In contrast, U.S. auto sales surged by 27% in February, exceeding the most bullish analyst forecasts as the lure of discounts from automakers led by GM outweighed concerns about higher oil prices for car shoppers.
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