China’s Q1 Auto Sales are strongest since 2014

China’s automakers’ association announced that China auto sales grew 7 percent in the first quarter.  This has been the strongest January-March period since 2014 that set up the world’s largest auto market for a better than anticipated year.  Analysts feared that sales would be weak within the first three months of 2017 after the government rolled back a tax cut on small engine cars on January 1st

First quarter sales the China Association of Automobile Manufacturers’ (CAAM) estimates in January that auto sales would grow 5 percent in 2017.  The market is expected to improve as the year progresses.  “Our current attitude should be cautiously optimistic, as in reality we still feel there is pressure,” CAAM spokesman, Xu Haidong explained as the association doesn’t plan to adjust the 5 percent estimate. 

“This is because of policy changes, as well as related economic trends and other reasons.”  Auto sales rose 4 percent year-on-year in March to 2.5 million vehicles, CAAM reported.  The tax for purchasing cars with engines of 1.6 litre capacity or below raised to 7.5 percent this year from 5 percent the previous year as the government intervened to stimulate slumping sales.  Next year the tax will raise to its normal rate of 10 percent. 

“We’ve always planned for the fact that in the first quarter there would be payback from the pull forward of sales into the fourth quarter (before the incentives was reduced),” Chief Executive of Ford Motor, Mark Fields told reporters in Shanghai ahead of the CAAM figures.  “We expect the second, third and fourth quarter to show improvement.” 

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