Restrictions may crimp auto purchases

A Chinese auto association has forecast that vehicle sales will slow more than previously projected, as the economy is showing little sign of improvement and more cities are mulling purchase restrictions.

Total vehicle deliveries will probably rise by 8.3 percent to 23.83 million units, compared with its January prediction for 10 percent growth, the China Association of Automobile Manufacturers said on Monday. Last year, sales increased 14 percent, making China the first country in which more than 20 million vehicles were sold in any given year.

But demand for commercial vehicles slumped in the first half of 2014 and analysts forecast the world's second-largest economy would expand at its slowest annual pace since 1990. More local governments are looking to limit the purchase of new vehicles to cut emissions in support of the government's war on pollution.

"We believe the economy hasn't shown obvious signs of improvement in the second half," said Xu Haidong, director of the auto association's trade coordination department. "It's hard to say whether more local governments will issue restrictions this year, but this is definitely one of the risks we have to take into account."

Passenger vehicle sales climbed 11 percent to 9.6 million units in the first six months of the year, led by a demand for multipurpose and sport utility vehicles, according to data from the association.

China's gross domestic product expanded 7.4 percent in the first quarter from a year earlier, the slowest pace since 2012 and down from 7.7 percent in the previous three months.

Yale Zhang, Shanghai-based managing director of researcher Autoforesight Shanghai Co, said: "Usually, if there is not a lot of investment, demand for trucks will be affected. If there are no construction projects, truck demand will be lower."

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