After a two-year boom, China's automobile market unexpectedly stalled in the second quarter of 2004. The soaring rise in car sales over the last two years has gone down from over 60 percent to less than 30 percent. Though various efforts have been made to revitalize the market, including massive price cuts, it seems consumers are still reluctant to commit to buying.

Yayuncun automobile market, the largest in the city, is experiencing a cold winter, with no more than a dozen would-be car buyers browsing around inside.

Thousands of cars are quietly waiting in the complex for their new owners. And with few clients to attend to, the sales people are waiting even more quietly. Bulletins with announcement of price-cuts can be seen almost everywhere in the market.

Car buyer Ma Yi said, "I can see the market is very quiet. The price is very low as well. But I am still not very sure if I should spend my money. I think most people would rather spend less money on a cheap car, not those luxury ones."

Figures from the State Information Center show that stocks of passenger cars manufactured in China in May reached over one million, the result of manufacturers' overly optimistic expectations for this year's market.

Qi Xiaogang, Director of the Yayuncun Automobile Market Information Center said, "The market has been deteriorating since April, and now it has reached its lowest point. Yayuncun is a typical example in Beijing. According to our survey in ten other big cities, their situation is almost as bad."

Just a month ago, the Beijing Car Expo seemed to have opened a new world for locals. Flexible controls on import permits led to the appearance of more cut-price foreign cars in China.

But all these have failed to boost the market. Car dealers say that's because people who are able to own cars have already managed to get what they want in the last two years.

But economists have a different view. First, the macro-adjustment policy drawn up earlier this year seems to be working. Fixed asset investments have been limited. Overheated industries such as real estate and metallurgy have been reined in.

Secondly, bank loans are proving difficult to obtain for would-be car buyers. Banks are becoming highly cautious in funding car buyers, as many of them have problems in paying their mortgage.

And finally, consumers are waiting for the quota on imported cars to be removed next year.

Xu Ziming, Deputy Director of the State Information Center, said, "Consumers are no longer as anxious as they were a few years ago. The situation may be a little better later this year if consumers recognize that there is much space for price cutting. But one thing is for sure, the car market has become a complete buyer's market."

Experts also admit that despite the stalling market, a large number of potential buyers still exists. Next week, top analysts will gather in Beijing to try and figure what will happen in the second half of the year. But no matter what the future holds, in a buyer's market, manufacturers and dealers will have to take more of their clients' interests into consideration.

(CCTV July 13, 2004)