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Domestic auto sales growth slows down as international carmakers reassess China plans
The Chinese auto market has long been a key driver of growth for global automotive giants. However, recent signs of slowing domestic sales have prompted some international automakers to rethink their expansion strategies in the region. According to official data, car sales in September reached 194,100 units, marking a 14% rise from August—a rare monthly increase since April. Still, this figure remains slightly below the level recorded in September of the previous year. Industry analysts suggest that the current slowdown is partly due to the government’s tightening policies introduced earlier this year, which have led to a credit crunch. This has significantly impacted the auto loan sector, a major catalyst for sales growth. Although the fourth quarter typically sees the strongest performance in China’s auto market, conditions remain challenging.
According to McKinsey, banks have already exhausted their auto loan quotas for the year and are unlikely to resume large-scale lending before 2005. For global manufacturers like Volkswagen, General Motors, and Honda, the Chinese market plays a crucial role in their overall profitability. Over the past year, these companies and their local partners have invested over $10 billion to boost production capacity, aiming to reach around six million vehicles by 2007—three times the volume of Chinese car sales in 2003. Despite these ambitious goals, some executives now acknowledge that the unpredictable market environment is pushing them to reconsider the pace of their expansion plans.