China’s car sales fell the most in nearly seven years in September, stoking concerns the world’s biggest auto market could contract for the first time in decades this year amid cooling economic growth and a biting trade war, Reuters reports.
Vehicle sales slumped by 11.6 percent to 2.39 million units last month, the third straight decline, the China Association of Automobile Manufacturers (CAAM) said on Friday. It cited a sluggish economy, deleveraging and a tough pollution crackdown as reasons for the steep fall.
A stalling of China’s giant auto sector will be a concern for the country’s leaders in Beijing. It is a major driver of the economy and an important barometer of Chinese consumers’ willingness to open their purse strings.
“The automotive industry has been a driver of China’s economic growth for years. Now it is pulling back,” Xu Haidong, CAAM assistant secretary general, said at a briefing in Beijing.
China’s top auto industry body said its already meager forecast for full-year growth would be missed, though the market should avoid a sales decline. Analysts have predicted the market could contract this year for the first time since at least the early 1990s.
The downtrend in sales underscores how international car makers, from General Motors (GM.N) to Toyota Motor (7203.T), are in for a tough ride at a time when they are increasingly looking towards China as a driver of growth.
It also exemplifies the impact of the trade war, with autos being among the sectors hardest hit by tariffs. CAAM said last month sales were impacted by a sluggish economy and the knock-on effects of the trade war.
China’s economic malaise has seen the domestic stock markets plunge and the country’s factory sector stall last month after over a year of expansion. The International Monetary Fund also cut China’s growth forecast for next year to 6.2 percent from 6.4 percent.
Beijing, concerned about the slowdown, has already opened the taps to boost liquidity in the market.