China's Auto Sales Idled in October

By Trefor Moss Features Dow Jones Newswires

China's passenger-car sales stalled in October, as growth continues to elude some auto makers in the world's largest vehicle market.

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Passenger-car sales increased just 0.4% year-over-year to 2.35 million, the government-backed China Association of Automobile Manufacturers said on Friday. Sales increased 2.1% in the first 10 months of 2017, a sharp slowdown compared with the 15.9% growth recorded last year.

Total vehicle sales increased 2% compared with October 2016 to 2.7 million, with sales up 4.1% in the January to October period.

Promotions offered by some auto makers hadn't been strong enough and this was reflected in weaker sales, said Chen Shihua, the association's assistant secretary-general.

Commercial-vehicle sales remained strong, however, propping up the sector's overall showing: They were up 14.8% year-over-year in October to 351,000.

In recent months, the manufacturers association has warned that its 5% growth target for this year probably wouldn't be met, and growth now won't much exceed 4% judging by the October data, the association said Friday.

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An increase in the sales tax on light vehicles due this January should help produce a rise in sales in the closing weeks of the year, said Mr. Chen. A tax increase to 7.5% from 5% in January 2017 stimulated sales in late 2016, as consumers bought new cars ahead of the rate rise. The tax will go up to 10% in the new year.

The association said it was too early to predict the implications of potentially far-reaching changes for China's auto industry announced this week during the visit of President Donald Trump. On Thursday Chinese officials confirmed plans to cut vehicle import tariffs from their current 25% level. No details further details have been announced.

In addition, next year will see the beginning of a pilot program allowing foreign auto makers to build electric cars at wholly owned plants located in free trade zones, they said. These proposals have yet to be fleshed out, the association said.

Electric-car maker Tesla Inc. has struck a deal with Shanghai's government allowing the Silicon Valley auto maker to build a wholly owned factory in the city's free-trade zone, The Wall Street Journal reported last month.

Though October was a slow month overall, some of the biggest foreign auto makers posted strong sales results.

General Motors Co. outperformed the market in October: Its sales grew 10.7% last month year-over-year, with sales up 2.2% in the January-to-October period.

Volkswagen AG said its China sales grew 9.2% last month, with 3.9% growth for the year to date.

The big Japanese auto makers have all had a strong run in China this year, and that continued in October.

Nissan Motor Corp. said its sales increased 18.2% last month compared with a year earlier, while Honda Motor Co. and Toyota Motor Corp. registered increases of 14.5% and 13.5% respectively. Auto analysts say the Japanese auto makers have been quicker than some of their rivals to refresh their product range, especially in the booming sport-utility vehicle segment.

In contrast, Ford Motor Co. said its China sales fell 5% last month. Its sales were also down 5% in the first 10 months of the year. On Wednesday, Ford announced that it would set up a new joint venture in China with local auto maker Zotye Automobile Co. that will build electric cars at a new $756 million plant. Part of the rationale for the new venture, the company said, was to tap into relatively underserved segments of the China market to find new sources of growth.

Hyundai Motor Co. has had a bruising year in China as a result of political tensions between Beijing and Seoul, but late last month the two governments agreed to reset relations, spelling better fortunes for Hyundai in one of its most important markets. But even before that happened, Hyundai was showing signs of pulling out of its sales slump in China: Its sales fell 11% last month year-over-year, a much better performance than the steep sales declines the company recorded earlier this year.

Lin Zhu in Beijing contributed to this article.

Write to Trefor Moss at Trefor.Moss@wsj.com

(END) Dow Jones Newswires

November 10, 2017 04:49 ET (09:49 GMT)