China worried over auto sales

Deseret News (Salt Lake City), Sep 10, 2004 by Associated Press

SHANGHAI, China -- China's government is investigating a downturn in the automobile industry, state media reported Thursday, citing worries over soaring production and slowing sales.

China is on-track to be the world's third largest auto manufacturer after the United States and Japan, with output forecast to top 5 million units this year, the state-run newspaper China Daily reported.

But sales have been slowing.

Statistics from the China Association of Automobile Manufacturers show sedan sales grew 32 percent in the first half of this year over the same period a year earlier, a significant slowing from the 75 percent sales growth for all of 2003.

Sales totaled 346,000 units in July, down 9 percent from June and the fourth straight month of month-to-month declines, the newspaper said.

Top leaders have already targeted such "negative trends" for investigation, it cited Chen Jianguo, head of the National Development and Reform Commission, as saying.

"Our commission pays special attention to these trends and we are immersed in in-depth investigation now," he said.

Policy-makers have identified the auto industry as one of several sectors facing over-investment, as foreign automakers like GM, Ford and Volkswagen pour billions of dollars into new factories and ventures here.

There has been no indication, however, that the slowdown in sales might prompt a turnaround in the government's strategy of building an internationally competitive auto industry.

So far, official policy appears bent on promoting private automobile use, despite the difficulties China's crowded cities are finding in accommodating the growing legions of cars on congested roads.