With Tax Incentives Gone, Chinese Auto Sales Drop Like A Rock

China’s automobile sales market just tanked, declining 33%, month-over-month in February.

Waverly Advisors point out that this isn’t exactly surprising:

With the end of stimulus tax incentives and new restrictions on car purchases in some urban areas, this sequential contraction is to be expected and reflects a maturing consumer automotive market. Taken in the context of slowing property development and industrial capacity expansion as recent tightening measures driven by inflationary concerns work through the system, this contributes to the market narrative of Chinese cooling.

Nevertheless, this has to be of some concern for major car exporters like Volkswagen and Toyota. Only today, Toyota announced its intention to refocus on emerging markets, and have 15% of its profit coming from China.

Volkswagen saw its Audi brand grow so much in China in 2010, its sales were only 1000 cars less than its home market total.

Definitely a slow down auto investors should take note of.

Don’t miss: What Credit Suisse think the Chinese market will look like in 2015 >

From Waverly Advisors:

Chart

Photo: Waverly Advisors

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