Automobile output and sales in China further plunged in July from that in the previous month, according to an industry organization.

The output and sales amounted to 354,100 and 346,000 vehicles last month, down 15.48 and 8.98 percent respectively from June, statistics from the China Association of Automobile Manufacturers show.

This is the fourth consecutive month-to-month decline since April.

Vehicle output and sales in June fell by 1.41 percent and 4.06 percent from May.

"The decline mainly resulted from automakers' production line checks and a longer summer holiday in July than before because of power and energy shortages in the nation," said Zhu Yiping, a spokeswoman from the auto association.

Output of passenger cars declined by the biggest rate month-to-month in July among all types of vehicles, the association said.

Passenger car output tumbled by 22.07 percent to 171,900 units last month, with sales decreasing by 0.78 percent to 170,000 units.

Bus sales dropped by the largest rate of 23.7 percent to 77,600 units in July from the previous month.

However, both accumulated vehicle output and sales in the first seven months of this year rose by more than one-fifth, if compared with that of the same period of last year.

Total vehicle output from January to July this year reached 3.03 million units, up 23.54 percent, with sales growing by 20.57 percent to 2.90 million units, according to statistics.

Passenger car output and sales jumped by 30.21 percent and 27.09 percent year-on-year to 1.45 million and 1.34 million units respectively during the period.

Truck output and sales rose by 15.66 percent and 20.4 percent to 847,800 units and 854,000 units during the period, and that of buses increased by 20.85 percent and 10.1 percent to 733,700 units and 708,400 units.

Both output and sales in August will possibly decline from July because manufacturers will continue to cut production to ward off high inventories, said Xia Jun, an auto analyst with CCID Consulting, a Hong Kong-listed industry consultancy based in Beijing.

"A small rebound is expected starting from September as many people are likely to buy cars before the National Day Holiday (from October 1 to 7)," Xia said.

But she said that negative factors persist during the rest of this year, including the government's squeeze on car loans, anticipated new price wars between producers and the nation's removal of quota and further tariff cuts on vehicle imports next year, which will continue to dampen consumers' enthusiasm.

"There is no indication that controls on car loans will be loosened soon," she said.

Many commercial banks in China have raised the threshold for auto financing and even suspended the business for fear of bad loans.

China will cut tariffs on vehicle imports to 30 percent at the beginning of next year from the current 37.6-34.2 percent in line with its commitments to the World Trade Organization.

Xia forecast that both total vehicle output and sales would grow by 20 plus percent for all of this year from last year, with passenger cars by a little less than 30 percent.

Last year, total sales of China-made vehicle surged by 34 percent to 4.39 million units, that of passenger cars by 75 percent to almost 2 million units.

(China Daily August 13, 2004)