China car sales fall for 2nd month as economy ebbs

By Fang Yan

SHANGHAI (Reuters) - China's passenger car sales shrank for a second month in a row in September, official data showed on Friday, as a slowing economy slammed the brakes on demand in the world's second-largest vehicle market.

Monthly car sales fell 1.44 percent from a year earlier to 552,800 units, according to the China Association of Automobile Manufacturers, the country's official industry association.

The data followed nine-month figures from two major foreign automakers showing a marked slowdown in growth in China, one of the few remaining bright spots for an industry hit particularly hard by the deepening global credit crisis.

Ford Motor's (F.N) China sales climbed 7.13 percent in January-September, well below 30 percent growth a year earlier, while Volkswagen AG (VOWG.DE) posted 13.1 percent growth in China, Hong Kong and Macau, also down from 30 percent a year ago.

Other domestic and foreign automakers such as General Motors (GM.N) and SAIC Motor (600104.SS), China's biggest automaker, have yet to release their nine-month sales figures.

TAPERING OFF

Analysts and industry experts said few were likely to sustain the robust growth of recent years.

"Market growth started to taper off in the first half and the trend has extended into the second half," said Yi Junfeng, an industry analyst with Changjian Securities. "Some automakers may hold up a little better than others, but no one is immune when the economy slows."

September's sales drop followed a 6.24 percent decline in August, which marked a stunning reversal for an industry that had grown accustomed to years of double-digit sales growth.

In addition to the slowing economy, higher fuel prices and the Beijing Olympics have been blamed for keeping customers from showrooms.

Industry researcher J.D. Power and Associates, in a report on Thursday warning of a collapse in the global auto market next year under the weight of the credit crisis and economic stress, forecast China auto sales growth this year at 9.7 percent, down sharply from last year's 24.1 percent.

Rao Da, secretary general of the China Passenger Car Association, a leading industry group, was even more pessimistic.

In a research report released on Friday, he cut his estimate for 2008 China car sales growth to 5-6 percent, from a 6-8 percent forecast released just last month.

"A decline is very likely in the first half of 2009, but things could improve in the second half as monetary easing moves taken by the government gradually take effect," the report said.

(Editing by Ian Geoghegan)