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Report: China's auto prices to fall in 4Q on slowing demand

(Xinhua)
Updated: 2008-10-18 13:41

Auto prices in China were expected to fall in the fourth quarter led by slowing demand, the price monitoring center under the National Development and Reform Commission (NDRC) said in a report on Friday.

Prices fell 2.09 percent in the first nine months due to excessive output and oversupply of new models in the second and third quarters, it said.

Auto consumption was dampened by the rising costs of automobile use, which also contributed to the price fall.

The government has unveiled an array of policies to limit car use, including raising the auto consumption tax and traffic restrictions on motorists during the Olympics. They have dampened auto sales and prices, said industry analyst Jia Xinguang.

The report noted auto dealers would habitually cut prices at year end to reach their annual sales target and clear out inventory.

It said the competition might force auto makers to cut prices as much as 3 percent. Price cuts remain the main force to boost lackluster sales in a market where supply exceeds demand.

Slowing demand dragged down September passenger car sales by 1.44 percent from the same period last year, after August sales contracted 6.24 percent from a year earlier.

The falling sales were driven by inflation and the tumbling stock market that drained consumer cash, as Jia put it.

He predicted the spreading financial crisis would drag world car sales down 0.3 percent from the 2007 level to 58.1 million units, the first fall in eight years, as the financial crisis began to affect all business sectors and the credit squeeze restricted potential buyers.