Over the quarter, car sales fell, but only by about 8% from 2004's first quarter – back when they were still galloping along. (Government credit curbs really did not kick into the second quarter last year.)
But it was scary getting to March. In the first two months of 2005, passenger car sales plunged year-on-year by 78.4% year on year – before roaring up in March, by 73% over February. Altogether, 574,300 units were sold in 2005's first quarter.
Reuters, quoting the China Association of Automobile Manufacturers, said the country's largest manufacturers actually increased sales marginally in March year on year, selling 256,000 passenger cars.
The decline in the year's first two months was blamed on, apart from the credit curbs, rising production and raw material costs – which are bound to go even higher as iron ore prices, already soaring, are hit with additional surcharges levied by exporters feeding China's mills.
As costs went up, car prices slipped an average 12% decline in the first three months, state media reported. The earlier two-month data took its toll. General Motors, already hurting badly at home, saw sales at its Shanghai unit slump 54% in January and February. Phil Murtaugh, GM China's Chairman and CEO resigned, and Kevin Wale, a 15-year veteran of GM operations in Asia Pacific, was brought in from GM's UK unit to replace him.
A dicey industry prognosis has a way of knocking exotic projects on the head. One to go was a much talked-about joint-venture between Shanghai Automotive Industrial Corp and Britain's cash-strapped MG Rover. SAIC said no, fearing it would be stuck with huge liabilities if MG Rover became insolvent.