China Auto Sales Rise 9% as Curbs Spur Purchases, PCA Says

Apr 08, 2014 4:19 am ET

(Updates with comment from association in seventh paragraph.)

April 8 (Bloomberg) -- Passenger-vehicle sales in China gained 9 percent last month, as deliveries rose from General Motors Co. to Toyota Motor Corp. and consumers brought forth purchases on concern more cities will limit ownership.

Retail deliveries of cars, multipurpose and sport utility vehicles climbed to 1.59 million units in March, the Passenger Car Association said today in a statement. The state-backed China Association of Automobile Manufacturers is scheduled to release monthly sales data on April 11.

Hangzhou, the capital of eastern Zhejiang province, joined Beijing and Shanghai among Chinese cities to impose quotas on new vehicle purchases, as part of measures to alleviate traffic congestion and air pollution. Consumers are bringing forth purchases in anticipation more cities will roll out similar steps as local governments respond to Premier Li Keqiang’s call to wage war on smog.

“People don’t want to risk their chances of owning a car and they would rather buy sooner than later given that it is unpredictable when purchase limits would be imposed,” said Han Weiqi, an analyst with Shanghai-based analyst at CSC International Holdings Ltd. “The rush in orders helped push up sales last month.”

Like many major cities in China, air quality has deteriorated in Hangzhou as the number of vehicles increased. Traffic has also slowed to under 20 kilometers (12 miles) per hour during morning and evening peak periods, according to the city government, which plans to allocate car plates via lottery and auction.

City Restrictions

Dealerships in Hangzhou received orders for 70,000 vehicles on March 25, the day the city government announced it will cut new vehicle license plates issued a year by more than 70 percent.

“Panic buying in other big cities is intensifying,” PCA said in the statement. “There are currently more than 10 cities with rumors of impending purchase restrictions. Panic buying may increase vehicle sales by 500,000 units, providing the base for continued rapid growth in this year’s market.”

The China Association of Automobile Manufacturers in July 2013 identified eight cities that may impose car purchase restrictions. Two of the cities -- Hangzhou and Tianjin -- have since introduced such measures. The remaining six cities on the list are Shenzhen, Chengdu, Shijiazhuang, Chongqing, Qingdao and Wuhan.

Air Pollution

Premier Li said last month that fighting air pollution is one of the government’s top priorities. The World Health Organization said in March that air pollution contributed to 7 million deaths worldwide in 2012 -- with 40 percent of those coming from the region dominated by China under the WHO’s classification system. Outdoor air pollution can cause lung cancer, a WHO agency said last year, ranking it as a carcinogen for the first time.

Among foreign automakers, GM boosted sales in China by 7.8 percent last month to 313,283 units, helped by demand for Buick and Cadillac vehicles. Toyota’s March deliveries climbed 19 percent from a year earlier to 90,400 units.

Industrywide deliveries in China are forecast to increase as much as 10 percent in 2014, slowing from last year’s 14 percent growth as anti-pollution and austerity campaigns spread, according to CAAM.