why 2 negotiators on standby?????, page-5

china's august car sales revive a tad but stay wea China's August car sales revive a tad but stay weak
September 14, 2004 4:57am ET (Reuters)

SHANGHAI, Sept 14 (Reuters) - China's car sales climbed 7.4 percent in August from a year ago, showing some signs of life as buyers scared off by a nationwide clampdown on auto loans trickled back into showrooms, official data showed.

But that was well off the pace of last year and earlier in 2004, indicating persistent nervousness over Beijing's efforts to curb easy loans to prevent a rash of new bad loans from forming.

Car sales climbed 3.7 percent in July year on year, after rising 4.8 percent in June and 21 percent in May.

Sales of sedans crept up 0.2 percent to 170,300 in August from July, as the world's No. 4 vehicle market continued to feel the impact of credit curbs, the China Association of Automobile Manufacturers said in a report seen by Reuters on Tuesday.

On a month-on-month basis, car sales had risen marginally in July to snap three months of declines. But analysts have warned against premature celebration amid official steps to cool an economy in danger of overheating.

They say car sales this year may grow just 10-20 percent compared with 2003, when sales almost doubled to about 2 million.

A total of 1.506 million cars were sold in China from January to August, up 23.68 percent from a year earlier, the association said on its Web site (www.auto-stats.org.cn).

Growth in sedan sales in China has decelerated since April when Beijing slapped curbs on credit, afraid that over-investment in pockets of the economy could generate more bad loans.

Thus, car sales at Volkswagen's main Chinese joint venture in Shanghai fell 7.1 percent in August from July, to 26,034 units, Europe's biggest carmaker said earlier this month.

In July, Volkswagen's China sales had grown almost 53 percent over the previous month, after prices were slashed by up to 11.7 percent, following a similar move by rival General Motors .

Last week, the Chinese car making venture between Honda Motor Co. and Hong Kong-listed Denway Motors Ltd. said sales fell 24 percent in August from July as production was suspended temporarily for maintenance.

Volkswagen, Ford Motor Co. and other multinational carmakers have unveiled plans to invest some $13 billion to bump up production to 6 million cars annually in China by the end of the decade, prompting fears of a profit-sapping glut. End of Story