China auto sales slump for first time in more than two years on slowing growth and market rout

Visitors at the Shanghai International Automobile Industry Exhibition on April 23.
Visitors at the Shanghai International Automobile Industry Exhibition on April 23.PHOTO: AFP

SHANGHAI (BLOOMBERG) - China's passenger-vehicle sales fell for the first time in more than two years as the nation's economic growth slowed and a stock-market rout dented buying sentiment.

Retail deliveries of cars, multipurpose vehicles and SUVs fell 3.2 per cent in June from a year earlier to 1.43 million units, the China Passenger Car Association said Wednesday on its website.

Carmakers including Volkswagen and General Motors which count China as their largest market, have cut prices to defend market share as demand slows and domestic rivals lure increasingly value-conscious customers with cheaper sport- utility vehicles.

A record rally in China's stocks turned into a rout last month, with the benchmark Shanghai Composite Index plunging more than 30 per cent since June 12.

"Judging from the momentum, the second half is not looking too optimistic," said John Zeng, Shanghai-based managing director at researcher LMC Automotive. "The growth slowdown will continue. Automakers will be more cautious in terms of production."