China's vehicle sales rise 4.8 percent in June, sustaining upswing

BEIJING (Reuters) - Auto sales in China rose 4.8 percent in June from a year earlier to 2.27 million vehicles, an industry association said on Wednesday, as demand remained on the upswing in the face of concerns such as the impact of a Sino-U.S. trade spat.

Newly manufactured cars are seen at the automobile terminal in the port of Dalian, Liaoning province, China July 9, 2018. Picture taken July 9, 2018. REUTERS/Stringer

The China Association of Automobile Manufacturers (CAAM) said overall sales during the first half of 2018 were up 5.6 percent from the same period a year prior, totaling 14.1 million vehicles.

Last month’s sales rise followed a 9.6 percent increase in May and 11.5 percent growth in April. Auto sales in China, the world’s biggest vehicle market, have been rebounding steadily since February when sales volume fell 11.1 percent.

Xu Haidong, CAAM assistant secretary general, told reporters the association was keeping its forecast for the year unchanged.

It had projected in January market growth of 3 percent this year, in line with 2017 but significantly below the 13.7 percent gain in 2016.

Still, because the market saw faster-than-expected growth in the first six months of the year, CAAM is in essence forecasting slower growth in the rest of year.

One official, Chen Shihua, said he and others at CAAM “are concerned about pressures in the second half”.

Neither Chen nor Xu would elaborate, but one source of pressure appeared would be ongoing trade tensions between China and the United States.

After China raised tariff rates on U.S.-made vehicles imported into China earlier this month in retaliation for U.S. President Donald Trump’s heavier duties on Chinese goods, Xu said “BMW and Mercedes will be affected”.

On July 6, the United States and China slapped tit-for-tat duties on $34 billion worth of the other’s imports, with Beijing accusing Washington of triggering the “largest-scale trade war” ever in a sharp escalation of their months-long conflict.

The higher tariffs on U.S.-made cars levied by Beijing have already forced electric carmaker Tesla Inc TSLA.O to raise prices on cars Tesla brings into China.

Among other foreign automakers that could announce price increases in China are BMW BMWG.DE and Daimler AG's DAIGn.DE Mercedes-Benz.

BMW said last week it was unable to “completely absorb” the new tariffs, hinting at possible price hikes on cars it sells in China in the near future.

CAAM said sales in China of so-called new-energy vehicles jumped 42.9 percent in June from a year earlier to about 84,000 vehicles.

That took sales of new-energy vehicles - essentially all-electric battery cars and plug-in electric hybrids - to about 412,000 vehicles for January-June, up 111.6 percent from the same period a year earlier.

Reporting by Fang Cheng and Norihiko Shirouzu; Editing by Sunil Nair