Auto sales put on the brakes

By Zhao Qian

Domestic auto production and sales declined in July over the previous month, but analysts still expect further growth in the industry this year.

The auto sales of the country last month barely exceeded 1 million units, a 6.7 percent drop compared to the previous month, the China Automotive Technology & Research Center said Monday.

This is the third consecutive month-on-month decline since May of this year.

Ford also reported Tuesday a 6.3 percent decline in monthly sales in the world's biggest auto market.

But analysts said this was just a seasonal phenomenon.

"The third quarter is always a bad season for the auto market, and the sales volume this year as a whole will still have a 20 percent growth rate," Li Menghai, a senior auto analyst with TX Investment Consulting, said Tuesday.

"It is a sheer potential market of where auto industry can grow, since cars are still much less popular than in the US and other developed countries," Li added.

And foreign analysts concur with the continued growth potential.

"For the automakers who want to expand their businesses, many factors must be considered in building their research centers and factories," noted Stuart Ross, head of Industrial for Jones Lang LaSalle China Tuesday.

"From government support, to attracting talent, to infrastructure, to the logistics system and local characteristics, China has many auto clusters developing all over the country. Choosing the right site will impact profitability, operational integrity, and ultimately figure prominently in long-term success,"

In 2009, China surpassed the US to become the largest auto market in the world for automobile sales at 13.62 million vehicles.