Slow auto sales expected to continue as 'new normal'

Price cuts on Chevrolets lure potential buyers after lackluster performance in May. [Photo/China Daily]

Statistics show that SUV sales in the period rocketed by 47.7 percent and MPV sales by 17.9 percent year-on-year.

The boom in SUV and MPV sales is helping Chinese brands gain a larger share of the auto market.

By the end of May, domestic brands held a 42.1 percent market share, up from 38.2 percent in the same period a year earlier.

During that time, brands from Germany, Japan, the United States and South Korea saw their market share fall by 0.5 percent to 1.7 percent each.

As auto sales slow, many industry insiders are advising caution against overcapacity.

The combined auto capacity in China is estimated to be 40 million units in 2015, while sales for the year are forecast to be 25 million units.

A recent survey shows that half the production lines remain idle at 15 out of 19 Chinese automakers.

Overcapacity has become a problem, said Liu Weidong, vice-general manager of China's Dongfeng Motor Corp, at the Global Automotive Forum held in Chongqing on June 9 and 10.

He estimated that overall market growth would be lower than 3 percent or even stagnant, adding that Dongfeng has been controlling the number of its new projects since 2013.

Feng also warned of overcapacity and said it would become a problem when the industry's overall growth falls below the growth rate of China's GDP, which stood at 7 percent in the first quarter.

Some joint ventures have cut their production. Local Chinese reports said FAW-VW produced 25 percent fewer vehicles in April than the same period a year earlier; Dongfeng Honda reduced production by 20.9 percent and Beijing Hyundai by 8.8 percent.