New car sales in China grew at just 3.7 percent last month, cementing fears that demand in the world's largest auto market could be drying up.
The China Association of Auto Manufacturers announced on Monday that sales in the country grew just 3.7 percent to 1.23 million vehicles in August, continuing a sliding trend. China's July sales cooled to an 11 percent increase, down from 15.8 percent in June.
Without two critical outside factors, sales could have been much worse. Zhang Xin, an industry analyst at Guotai Jun'an Securities in Beijing, says that many August shoppers were looking to buy before government regulations that limit the number of vehicle registrations went into effect. Zhang also noted that China's inventory glut has also sparked a price war between the world's automakers.
"I think the main reason is 'On Sale,' especially led by the famous and luxury brands," Zhang told The Detroit News.
However, several big name automakers were able to perform well in the month at the expense of smaller Chinese firms. GM, the largest foreign automaker operating in China, increased its August sales 7.3 percent to a record-setting 220,996 units.