First six-month fall since 2006; dealers grapple with inventories

Vehicle imports slumped 10.7 percent in the first half, to 526,000 units, as the domestic demand slowdown of the past two years drove up inventories of foreign cars.

Customs figures also show that the decline was the first half-year contraction since 2006, when China implemented its World Trade Organization commitment to lower the import tariff for vehicles to 25 percent.

The figures "indicate that dealers are making efforts to ease their high inventory pressure, as imported vehicle sales in China are still increasing this year, though growth slowed from years before sharply", said Wang Cun, a senior manager of China Automobile Trading Co Ltd, the country's largest vehicle importer.

According to the company, in the first five months, sales of imported vehicles increased 8 percent from a year earlier to 447,000 units, compared with growth of 76.1 percent in 2010, 29 percent in 2011 and 18.7 percent in 2012.

"The high market demand and growing speed made the dealers raise their expectations and order more vehicles from outside China.

"However, the sudden slowdown in the domestic market led to an oversupply, and dealers suffered from increasing inventories from the fourth quarter," said Wang.

"To ease the inventory pressure amid a continued market slowdown, they need to reduce imports," he added.

Statistics from the company show that in May, dealers' average inventories of imported vehicles stood at 2.7 times monthly sales.

"That means the dealers will continue their market promotions, including price cuts and other offers, to cope with the high inventory," said Wang.

According to the company's second-half forecast, the growth rate for imported vehicle sales in the world's largest automobile market will continue to slow to a range of 8 to 10 percent.