China auto sales drop again on trade war, economic gloom

By Lusha Zhang and Norihiko Shirouzu

BEIJING (Reuters) - China's automobile sales fell for the second straight month in August as a weak macro economy and trade frictions with the United States made consumers cautious about spending, an industry association said on Tuesday.

Chinese auto sales dropped 3.8 percent in the month from a year earlier to 2.1 million vehicles, after a 4.0 percent fall in sales in July and an increase of 4.8 percent in June, the China Association of Automobile Manufacturers (CAAM) said.

China is the world's largest auto market and a critical region for global carmakers, though regulators in the country have spooked some firms with a clamp-down on overcapacity in the sector and an aggressive push towards electric vehicles.

Worries about China's overall economic situation led people to tighten their purse strings during July and August, CAAM assistant secretary general Xu Haidong said. The on-going trade spat with the United States was another factor.

"The trade frictions brought uncertainties, impacted sentiment and made Chinese customers more cautious," Xu told reporters at a briefing in Beijing.

The recent sales dips have reversed a winning streak since February when sales volume fell 11.1 percent. Overall sales for the first eight months of the year totalled 18.1 million vehicles, up 3.5 percent from the same period a year earlier.

CAAM attributed weak sales of American brands to product and marketing issues, and Xu noted that there was no boycott of U.S. auto brands.

Citing Ford Motor Co as an example, Xu said Ford is not rolling out new or redesigned products fast enough and has allowed Chinese consumers to turn to other brands. Ford's China sales dropped by over a third in August.

CAAM has forecast overall market growth of 3 percent this year, in line with the previous year but significantly below the 13.7 percent gain in 2016.

Yale Zhang, head of Shanghai-based consultancy Automotive Foresight, said a weak stock market and higher gasoline prices had hit demand for popular sports utility vehicles (SUVs), which have been behind much of the market's recent growth.

Sales of new-energy vehicles - a category comprising electric battery cars and plug-in electric hybrid vehicles - rose 49.5 percent in August from a year earlier to 101,000 vehicles.

That took new-energy vehicle sales in the first eight months of this year to 601,000 vehicles, up 88 percent from the same period a year earlier.

(Reporting by Lusha Zhang and Norihiko Shirouzu; Editing by Sunil Nair)