Auto sales in June expected to remain flat following reduced import tariffs

Chinese auto dealers expect sales in June will remain flat due to weak consumer demand and price cut plans in China following reduced tariffs, according to a survey published by the China Automobile Dealers Association on Friday.

Auto dealers said car sales in May failed to meet their expectations, with the May Day holiday not driving enough sales in the retail market. The survey showed that most dealers expect market demand in June will remain about the same level as last month.

Dealers said that they estimate fewer consumers will buy imported vehicles this month as price cuts on imported cars has lengthened the wait-and-see period for customers. Most consumers are considering and comparing prices rather than actually buying imported vehicles, the survey showed.

On May 22, the Ministry of Finance announced that it would cut import tariffs on vehicles starting from July 1. Import tariffs for most vehicles will be reduced to 15 percent, down from 25. Auto companies including Tesla, Volvo and Audi have announced plans to reduce vehicle prices depending on different models.

"Consumers are still considering and paying attention to car prices in July," the survey mentioned. 

Analysts said the price adjustment of imported vehicles will also lead to lower prices for some Chinese auto brands. Consumers are set to benefit from the ensuing competition, which is also another reason they are holding tight.

The China Automobile Dealers Association recommends that auto dealers rationally estimate the actual market demand and reasonably control their inventory levels to prevent excessive inventory pressure and operational risks.

The survey covered most car dealers from the top 100 auto dealership groups in China, with a sample of more than 1,000 stores across the country and 55 major auto brands.