Slowing Auto Sales in China: Bad News for Carmakers

By Trey Thoelcke Published Feb 13, 6:55AM EST

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The China Association of Automobile Manufacturers said Thursday that 1.85 million passenger vehicles were purchased in China in January, a record for monthly sales in the world’s largest auto market. However, that was growth of only about 7%, down sharply from a 17% gain in December.

The economic slowdown in the People’s Republic and efforts to fight traffic and smog in major Chinese cities gets the blame for the reduced growth in auto sales. The sales forecast for this year calls for growth of about 8% to 10%, down sharply from last year’s 15.7% expansion.

That is bad news for automakers, as China has been considered the future of the global car market. Some forecasts had it 50% larger than the U.S. auto market in a few years, perhaps double in a decade. The current market leaders in China are General Motors Co. (NYSE: GM) and Volkswagen, which each sold about three million cars there last year, and no doubt were looking forward to the nation representing a huge part of their future earnings.

Ford Motor Co. (NYSE: F) was gaining ground there too, with sales up nearly 50% to more than 935,000 vehicles last year. That helped it edge past Toyota Motor Corp. (NYSE: TM) and Honda Motor Co. Ltd. (NYSE: HMC) after trailing them for almost a decade.

Even luxury electric carmaker Tesla Motors Inc. (NASDAQ: TSLA) is pushing to make a splash in China. Its Model S will be available at a much lower premium than other luxury vehicles sold there. The country has criticized foreign automakers for excessive pricing. But Tesla sees China representing as much as a third of its global growth this year.

Between the economic slowdown and the glutted auto market in China, it looks like the hopes of automakers may not pan out for a while.

About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.