Both automobile output and sales in China plunged in October from the previous month after consecutive growth in August and September, according to an industry monitoring organization.

Vehicle output and sales stood at 374,300 units and 404,700 units last month respectively, down 14.47 percent and 7.83 percent from September, statistics from the China Association of Automobile Manufacturers indicated.

The drop came after growth of 15.93 percent and 14.37 percent recorded in September over the previous month.

"The plunge mainly resulted from manufacturers' cuts in production to ease inventories and the one-week National Day break (from October 1 to 7)," Zhu Yiping, the auto association's spokeswoman, told China Daily yesterday.

Domestic vehicle demand declined over four consecutive months from April to July of after peaking in March, leaving huge production inventories and at dealerships.

Among three main types of vehicles, passenger cars reported the biggest decline. Sedans saw a drop of 19.77 percent in October to 147,100 units with sales down 7.99 percent to 178,600 units.

Sales of buses saw a substantial decrease of 9.67 percent to 93,100 units with output dropping 8.12 percent to 93,200 units.

Truck output amounted to 134,100 units, with sales of 133,100 units in October, down 12.34 percent and 6.77 percent, respectively.

However, accumulated vehicle output and sales grew by 17.58 percent and 17.59 percent year-on-year to 4.23 million units and 4.13 million units during the first 10 months of this year.

Growth was down from 19.28 percent and 18.76 percent in the first nine months of this year, and from more than 30 percent last year.

Passenger car output and sales rose by 18.44 percent and 18.76 percent to 1.95 million units and 1.88 million units from January to October this year.

Truck output and sales reached 1.27 million units and 1.26 million units during the period, up 22.75 percent and 25.70 percent from a year earlier.

Bus output increased by 10.26 percent to 1.01 million units during the period with sales growing 6.87 percent to 993,700 units.

"We believe both vehicle output and sales will top 5 million units this year, although growth in the first 10 months was much lower than last year," Zhu said.

Last year, vehicle output and sales stood at around 4.4 million units.

But analysts and dealers are pessimistic about conditions during the remaining period of this year due to a slew of negative factors, such as the government's controls on car loans and interest rate hikes, skyrocketing oil prices and customers' persistent delays in making car purchases due to strong expectations that further car price cuts could occur next year.

"Both domestic vehicle output and sales will continue to decline in November, and a market rebound at the end of the year should not be expected," said Su Hui, general manager of the Beijing Asian Games Village Automobile Exchange, the biggest passenger car market in Beijing.

China will remove quotas and cut tariffs on auto imports to 30 percent next year from the present 34.2-37.6 percent in line with its commitments to the World Trade Organization.

The tariff will be cut to 25 percent by the middle of 2006.

(China Daily November 16, 2004)