May is perhaps the woeful month for all the Chinese car manufacturers, with sales down 20 percent from a month earlier and car stocks accounting for more than ten percent of the total output, Shanghai Daily reported on Sunday.

The domestic car market has kept a 50 percent growth for three consecutive years. However, the bulging car market seems to have limited space to expand, said an industry analyst.

In the coming two or three years, there is expected to have a 20-25 percent surplus in the domestic sedan capacity, the analyst pointed out.

Direct reasons for the market slump last month are not hard to find: higher thresholds for giving loans to car buyers; expecting the car prices keeping in line with the international market soon, many car buyers hold a wait-and-see attitude; frequent price wars frustrate car purchasers; many new models, without proper target customers, are less popular in the market; the markets in domestic small and mid-sized cities haven't been fully explored.

More deeply, most Chinese sedan manufacturers haven't prepared for the tough competition ahead, the analyst stressed.

(eastday.com June 7, 2004)