Plunging Stock Market Affects Automotive Industry in China

Published By : 09 Jul 2015 | Published By : QYRESEARCH

It seems that the Chinese automotive industry is losing its charm. China has been the largest market for auto manufacturers across the globe. However, the sluggish Chinese economy along with the recent stock market condition has taken a toll on the overall automotive industry of the nation. The Chinese automakers are facing losses after the slump in the stock market affected the demand from the world’s largest car market. Growing number of car buyers in China are cancelling their plans even though it means forfeiting their down payments. According to Cui Dongshu, the secretary general of Passenger Car Association in China, this move is a direct impact of the loss of around US$3.2 trillion in the Chinese stock market. 

Last month witnessed a dip in the auto sales for the first time in more than two years. The Shanghai Composite Index, which has plunged more than 30% since June, has made the consumers wary and this has directly hit the automotive sector. Auto dealers, who had earlier reported softening demand with prospective buyers postponing their purchasing plans, are now facing the prospect of lost sales. Analysts have mentioned that with people losing money in the stock market, the desire to buy cars among the consumers will further decrease. 

Auto makers such as General Motors and Volkswagen have slashed their prices to defend their market share amid slow demands and cheaper vehicles offered by the domestic car manufacturers. However, all these measures have not really boosted the sales numbers. Data released by the China Automobile Dealers Association revealed high inventory levels which indicated low market demands for nine consecutive months. Industry experts have mentioned that the weak car demand is expected to stay till September and it is unlikely that the government will put efforts to increase vehicle demand. 
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