China auto sales down 5.3 percent as SUV demand sags

In this Feb. 6, 2017, photo, workers assemble cars at the Dongfeng Honda automotive plant in Wuhan in central China's Hubei province. China's auto sales shrank by 5.3 percent in July 2018 from a year earlier as SUV demand sagged, adding to signs of economic malaise amid a tariff battle with Washington. (Chinatopix via AP)

BEIJING — China's auto sales shrank in July from a year earlier as SUV demand sagged, an industry group reported Friday, adding to signs of economic malaise amid a tariff battle with Washington.

Sales of sedans, SUVs and minivans fell 5.3 percent from a year ago to 1.6 million in the biggest global auto market, the China Association of Automobile Manufacturers reported. Total vehicle sales, including trucks and buses, fell 4 percent to 1.9 million.

Auto demand has cooled amid forecasts of an economic downturn after Beijing tightened controls on bank lending to cool surging debt.

China's mounting tariff fight with U.S. President Donald Trump over Chinese technology policy has added to anxiety, though the economic impact so far is limited.

Beijing imposed 25 percent import duties on U.S.-made autos as part of its retaliation for a similar American increase. But that falls most heavily on BMW AG's imports of SUVs from a South Carolina factory. American brands produce most of their vehicles in Chinese factories.

Weak demand is a setback for global automakers that look to China to drive revenue and are spending heavily to develop models for local tastes.

Sales growth in June decelerated to 2.3 percent from the previous month's 7.9 percent. Full-year 2017 sales growth was 1.4 percent.

SUV sales, usually the industry's bright spot, contracted 8.4 percent from a year earlier to 633,000, according to CAAM. Sedan sales shrank 1.2 percent to 815,000.

Sales of pure electric and gasoline-electric hybrids, boosted by subsidies and other government support, rose 47.7 percent to 84,000 but made up just 5 percent of the total.

Beijing is in the midst of a multibillion-dollar campaign to promote electric car development and sales in hopes of creating a profitable new industry. Automakers are rolling out dozens of electrics but still rely on sales of gasoline-powered models for their profits.

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China Association of Automobile Manufacturers: www.caam.org.cn

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