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China Car Sales Fall As Air Pollution Becomes Threat

The China Association of Automobile Manufacturers.released figure for July which show car sales have collapsed after a year which has posted an uncharacteristic slowdown. Sale fell by 6.6% or 7.1% depending on the source. Whichever number is correct, China’s position as the world largest car market looks less and less attractive to global manufactures which have looked to China to offset slowing sales and high car ownership penetration in Europe and the U.S. These auto companies face another threat, which is that car sales may be curtailed by the central government as air pollution spikes higher and higher in some of China’s largest cities

The Chinese car market was supposed to grow well beyond 20 million units nationwide and grow every years because so few Chinese own cars. By contrast, in the U.S. there are nearly as many cars as people. However, as American car and light truck sales move toward 16 million this year, there is evidence that new car buyers may not be as important as current owners who want a new car.

What has happened this year is that a rebound in American and Europe cars sales has shown that the strategy of investing billions of dollars in factories to supply cars to the Chinese may be an investment which will take years longer than expected to yield returns.

The slowdown in Chinese car sales has been caused by a weak economy, many experts believe. This may be only partially true. Car use in China’s largest cities has been curtailed due to periods of dangerously high air pollution. Since China’s government has only made the most modest effort to cut factory emissions, the problem will get worse. China’s manufacturing economy cannot be slowed by much by concerns about health. However, one of the easiest solutions is to make people commute by public transportation, or in car pools, or by bike or motor scooters.

China’s economy is only one cause of the drop in car sales. Its economy will recover. In the meantime, urban pollution will get worse

By Douglas A. McIntyre