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China’s Car Sales Slump Amid Sluggish Economy, Trade War

China car dealer

China’s total automobile sales dropped by 11.6 percent to 2.39 million units in September, the steepest drop since January 2012, due to slowing economic growth, pollution crackdown, and the trade war with the United States.

“The automotive industry has been a driver of China’s economic growth for years. Now it is pulling back,” Xu Haidong, assistant secretary general at the China Association of Automobile Manufacturers (CAAM), said on Friday, as quoted by Reuters.  

The car sales decline in September was the third month in a row that car sales in China fell, after a 3.8 percent drop in August and a 4.0 percent fall in July.

Year to date to September, China’s car sales were up 1.5 percent compared to the first nine months last year.

This year’s sales growth is likely to miss CAAM’s forecast for 3-percent growth, Xu said.

Last year, Chinese car sales increased 3 percent, much slower growth than the 13.7-percent jump in 2016.

While total car numbers are bleak, Chinese sales of new-energy vehicles—including electric vehicles (EVs) and plug-in hybrids—surged by 54.8 percent last month, growing a little bit faster than the growth in August. Total new-energy vehicle sales soared 81.1 percent to 721,000 vehicles between January and September, proving that zero-emission car sales are rising despite slumping overall gasoline and diesel-fired auto sales.

Related: IEA: Expensive Energy Is Threatening Economic Growth

The trade war is affecting foreign carmakers and EV makers that don’t produce vehicles in China. In this context, Tesla is said to be continuing with its plans to build a factory in China and is the sole bidder for a plot of land in Shanghai, Bloomberg reported this week, citing people with direct knowledge of the issue.

The China factory, to be built in Shanghai, will be Tesla’s first production facility outside the United States. The EV maker signed the deal for the construction project with the Shanghai authorities in July. The factory is expected to double Tesla’s electric car production, beginning in two years.

The peak annual turnout of the Shanghai factory will be half a million Teslas and the same amount of battery packs, to be achieved two to three years after the launch of production, Tesla said in July after the signing of the deal with Shanghai authorities. This will put it basically on par with Tesla’s original factory in Fremont, California.

By Tsvetana Paraskova for Oilprice.com

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