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China July car sales slow down over license restriction policy

08-22-2011 13:03 BJT

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This past July, China's passenger car sales have been less than spectacular. Some say this could mean the market is reaching a bottleneck, but government regulations may also have a part to play. Our reporter Lü Yao looks for the root of the slow-down.

This car dealer in northern Beijing is one of hundreds cross the city. After two years of booming business, he's been suffering a dramatic slump since the the start of this year.

Sheng Zengrong, a car dealer said, "Our sales are down 30 to 40 percent in the first half of August this year compared to the same period last year. Business is kind of slow."

The dealer is not alone. According to the figures released by China Association of Automotive Manufacturers, from January to July car sales nationwide increased just 3%, and July sales for passenger cars dropped almost 9% compared to June. Part of the reason for this is Beijing's new car license restriction policy, disqualifying many potential buyers.

Ms. Wu, a Beijing resident said, "I have to wait to buy a car, because I have to go through the license lottery process to get the quota."

Beijing represents at least 4.4% of China's market for passenger cars, so the city's policies have a significant impact on the national auto industry. Both car dealers and auto industry analyst also say that the governments decision to phase out incentives for compact cars have also had an effect on sales.

Du Fangci, assistant secretary general from China Assn. of Automotive Manufacturers said, "Some governmental measures were partly the cause the the slow-down of the car market. It explains why China's car market is shifting to a moderate growth pattern."

In the first half of 2011, eight out of 17 major car manufacturers in China did not see a rise in profits. China's car manufacturing and related industries are an important element in China's GDP, contributing significantly to employment and economic growth. Government support is considered crucial.

Du said, "The car manufacturing industry needs more attention from the government, it will generate a negative chain effect if the industry does not grow healthily."

Editor:Li Wanran |Source: CNTV.CN

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