Growth in car sales in China is expected to decelerate further this year after it slowed down sharply last year, an industry association and analysts said.
Carmakers continue to grapple with a cooling economy and rising inventories, the Wall Street Journal reported.
The China Association of Automobile Manufacturers said Monday it expects passenger vehicle sales to rise 8 percent to 21.3 million vehicles this year, compared with 9.9 percent growth last year and 16 percent in 2013.
The slowdown will have an impact on global carmakers for whom China is a key source of revenues and profits.
IHS Automotive, a consultancy, estimates that in 2013 China contributed about 59 percent of Volkswagen AG’s net profit, 45 percent at BMW AG and 37 percent at General Motors Co., the report said.
Analysts expect China’s slowing economic growth, estimated at 7.3 percent last year, the weakest since 1990, to continue to weigh on car sales this year.
“Sales growth of sedans has almost stalled in recent months, because buyers of sedans are very vulnerable to the economic situation,” the report quoted Yale Zhang, managing director of consulting firm Automotive Foresight, as saying.
Last year, sedan sales in China rose only 3 percent from a year earlier.
In addition to the economic deceleration, demand for cars is being affected by restrictions on car sales that an increasing number of cities are introducing to tackle air pollution and traffic problems.
In December, Shenzhen capped the number of new car purchases at 100,000 a year, less than half the estimated 250,000 new vehicles sold last year.
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