August 02, 2015

“Declining car sales are definitely a warning sign for the Chinese economy...”

Bloomberg When China’s economy was booming, motorists became a symbol of the nation’s new spending power. Now, falling car sales may be more a symbol of China’s steady deceleration.

'Voracious demand saw China overtake the U.S. as the world’s biggest car market in 2009, spurring auto giants including Ford Motor Co. and Volkswagen AG to supercharge their production in the country. By contrast, Ford now sees a potential decline in auto sales in China for the first time in 17 years. Volkswagen suffered its first sales drop in a decade during the first half of the year.

'Because car demand is often a timely indicator of consumer and business confidence, it can capture economic trends before official data.

'With the auto sector second only to real estate as having the largest impact on suppliers, according to Banco Bilbao Vizcaya Argentaria SA, weakness in the industry threatens to worsen a downturn in manufacturing. A purchasing manager index for China’s factories slid in July to a five-month low.'

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