Chinese car makers are facing an uphill battle as demand for autos is slowing while the cost of raw materials is spiralling, state media reported Thursday, citing industry analysts.
Sales in the second half of the year are likely to still grow — but at a slower pace than in the past, the Xinhua news agency reported, citing Dong Yang, deputy director of the China Association of Automobile Manufacturers.
Dong noted that production costs for inputs like steel, rubber, glass and plastics have been rising since the second half of last year, while power prices had also gone up, squeezing profit margins.
Meanwhile, demand has been dented by a decision to hike domestic fuel prices by nearly 20 percent in June.
China's car sales rose 6.8 percent from a year earlier to 488,200 units in July, a slowdown from 17.1 percent growth in the first six months of the year, according to figures from the semi-official industry association.
Car sales, including sedans, multipurpose vehicles and sport utility vehicles, are also losing steam compared with the whole of 2007 and 2006, when sales jumped 21.7 percent and 30.0 percent year-on-year respectively.
