The car market in China is not quite as healthy as many had been surmising. Proving that bubbles continue to be bubbles, sales of new vehicles in the nation of the Panda dropped at a frightening rate the last few months. Moreover, some are worried that the symptoms of the poorly performing vehicle market could be a sign that the overall economy of the Big Red, the planet’s second largest economy, is far from robust.
If cars continue to sit at dealerships, shipping of new vehicles to China could be cut by 400,000 units, or 2 percent of nationwide sales, by the end of the year. That would, economists say, undermine economic growth.
Compounding this problem are the restrictions on the new car purchases that the government is implementing in many cities across the nation to combat the Great Smog of China and its world famous traffic congestion. However, these restrictions will initially boost sales, according to said Yale Zhang, managing director of Autoforesight Shanghai Co., who said:
“In the short term, the market will just jump in those cities. Consumers will panic and will start to buy whatever they can before the measures.”