THE country’s Association of Automobile Manufacturers said Friday that industry sales dropped 2.3 percent in June compared with the same period last year.

    It’s the first year-over-year decline in monthly auto sales in more than two years in China, which is the world’s largest auto market.

    “We’ve clearly hit an inflection point in sales,” said James Chao, China-based analyst with LMC Automotive. “What we’re seeing is a huge change over the last couple of years.”

    Last year, auto sales in China climbed 9.9 percent to almost 20 million vehicles. Following June’s sales drop, the manufacturers association has lowered its estimate for sales growth this year, from an increase of 7 percent to an increase of 3 percent.

    There are several reasons why Chinese consumers are thinking twice before buying a new car or SUV. For one, the plunge in China’s stock markets and falling consumer confidence have caused uncertainty in the economy.

    For another, laws in large cities restricting vehicle registrations — an effort to ease congestion — mean some families are opting to own just one vehicle. And uncertainty about prices may be prompting consumers to wait before buying.

    “Some big players in the industry, including Volkswagen, announced price cuts for some vehicles, and when that happens in China consumers expect even more discounting,” Chao said. “So consumers are waiting for that next leg down in pricing.”

    Volkswagen and General Motors are the two largest automakers in China. While all foreign automakers must share profits in the country with partner local manufacturers, sales are still a big contributor to their bottom lines.

    GM reported US$2.1 billion in equity income in China last year. That was a major factor in the automaker’s full-year net income of US$2.8 billion. Two weeks ago, GM CEO Mary Barra said GM is in better shape than other foreign automakers in China, mainly because its joint venture to sell lower-cost SUVs and cars in Western China is doing relatively well. (SD-Agencies)