BEIJING/SHANGHAI – Growth in China's auto market slowed to 6 percent in January, a third of the rate seen in December, partly weighed down by sluggish sales of commercial vehicles likes trucks and buses.
The relatively slow growth in the world's biggest auto market was also due to the week-long Chinese New Year holiday, or Spring Festival, starting at the end of January that resulted in fewer working days compared with 2013, analysts said. Most dealers close during the holiday, which fell in February last year.
The China Association of Automobile Manufacturers (CAAM) said on Thursday passenger vehicle sales rose 7 percent from a year earlier while commercial vehicle sales, which make up around 15 percent of the entire auto market, were virtually flat.
"Companies typically don't invest much on commercial vehicles at the start of a year, and that was much more evident in January this year due to the timing of the Spring Festival," said Wan Dong, analyst at Capital Securities.
The overall market grew 17.9 percent in December last year and ended the 2013 year with a growth rate of 13.9 percent.
CAAM last month said the auto market would likely grow 8-10 percent in 2014, echoing views from industry experts and analysts that 2014 would be another strong year for China's auto market.
Foreign carmakers like General Motors Co , Ford Motor Co and Toyota Motor Corp <7203.T> reported double-digit growth in January, but some local players like Geely Automobile Holdings Ltd <0157.HK>, posted sharp declines.
CAAM, whose members include China's biggest automakers like SAIC Motor Corp Ltd <600104.SS> and FAW Group, reiterated its opposition against any relaxation of foreign investment rules in the auto industry as indicated by several policymakers.
The Ministry of Commerce told a media briefing in November that the government would likely relax foreign investment restrictions soon in areas including auto manufacturing.
Currently, foreign ownership in a Chinese joint venture is capped at 50 percent.
"If China relaxes foreign ownership rules, it would be devastating to China's indigenous brands," CAAM, one of China's biggest industry associations, said in a statement. "Chinese local brands would be killed in the cradle."
China has required global automakers to form joint ventures in order to produce cars in the country, hoping that Chinese carmakers can absorb foreign technology and management expertise to become more competitive.
(Reporting by Sally Huang and Jonathan Standing in BEIJING and Samuel Shen in SHANGHAI; Editing by Kazunori Takada and Matt Driskill)