China-made vehicles' output and sales grew by a quarter during the first half of this year, despite further decline in June from May, an industry organization revealed Thursday.

Output and sales stood at 2,677,100 million and 2,553,600 million vehicles during the first half of this year, year-on-year increases of 27.10 and 24.15 percent, according to statistics from the China Association of Automobile Manufacturers (CAAM).

But output fell 1.41 percent to 419,000 vehicles in June, with sales down 4.06 percent to 380,100 units, the third consecutive tumble over the past three months.

"However, growth during the first half of this year is decent as many customers delayed their purchases as a result of government's controls on auto loans and manufacturers' frequent price cuts," said CAAM spokeswoman Zhu Yiping.

Cars bought using bank loans accounted for just 10 percent of those sold, compared to a figure of more than 30 percent a year ago.

"We cannot be very optimistic about the development of the auto market during the second half of this year because these negative factors will continue," Zhu said.

She predicted total vehicle output and sales in China this year would both exceed 5.2 million units, up from around 4.4 million units last year.

Both passenger car output and sales in China will top 2.5 million units this year, up from around 2 million units last year, she said.

Industry consulting firm Automotive Resources Asia Ltd President Michael Dunne forecast that car sales in China will grow by 15 to 20 percent to 2.4 million units this year.

"Prices are on a one-way street heading south (in the second half of this year), driven by intensifying competition," Dunne said.

Domestic car market prices declined by around 10 percent during the first half of this year.

Many carmakers in China cut prices over the past two months, such as the joint ventures of General Motors, Volkswagen, PSA Peugeot Citroen and Nissan.

"If you cut prices so often, who will buy your cars?" said Zhu. "Customers are becoming more sophisticated."

China's passenger car output and sales grew by 36.37 and 31.59 percent year-on-year to 1,246,100 and 1,132,000 units from January to June this year, according to statistics.

Truck output and sales amounted to 752,400 and 755,600 units during the period, increases of 17.70 and 23.79 percent.

Bus output rose by 22.64 and 13.63 percent year-on-year to 678,600 and 666,000 units during the period.

Increasingly intense competition has radically altered the position of automakers in China.

Chang'an Motor Corp, based in southwest China's Chongqing Municipality, and Beijing Automotive Holdings Corp, dwarfed Dongfeng Motor Corp to become the nation's No 3 and No 4 automakers with robust sales growth during the first half of this year.

Sales of Chang'an and the Beijing auto firm grew by 34.21 and 71.45 percent to 271,700 and 260,000 vehicles respectively during the period, statistics showed.

Meanwhile, Dongfeng based in central China's Hubei Province, which had been one of the nation's top three automakers for many years, sold 252,500 vehicles, a year-on-year increase of just 3.94 percent.

(China Daily July 16, 2004)