China industry vehicle sales gain at slowest pace in three years

China's industrywide vehicle sales rose at the slowest pace in three years even after a fourth-quarter tax cut by the government, as businesses put off purchases with the slowing economy and turmoil in the stock market battered consumer confidence. Wholesale deliveries of passenger and commercial vehicles climbed 4.7 per cent to 24.6 million units last year, the smallest rate of increase since 2012, according to the state-backed China Association of Automobile Manufacturers.

By comparison, US sales of new cars and light trucks rose 5.7 per cent to 17.5 million, according to Autodata Corp. Automakers had clamored for government support after the slowest economic growth in a quarter century combined with registration curbs in major cities to slow vehicle sales. At one point, Ford Motor Co held forth the possibility that industry deliveries may fall for the year, before a tax cut by the government starting October 1 revived demand.

"The opportunity for the auto industry in China to consolidate production capacity and improve profitability over the long term was stopped in its tracks when the government lowered vehicle purchase tax that artificially boosted demand," said Steve Man, a Hong Kong-based analyst covering the auto industry at Bloomberg Intelligence.

A stock-market rally that first soaked up funds meant for large-ticket purchases then proceeded to depress discretionary spending in the ensuing rout, resulting in lost sales of about half a million vehicles, according to association estimates. Purchase limits put in place in seven major cities erased another two million units of potential deliveries.

Sales of passenger vehicles climbed 7.3 percent to 21.1 million units last year. Commercial vehicles, which includes buses and trucks, fell 9 percent to 3.45 million units.