This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Car Sales Steady Despite China's Ownership Restrictions

TAIPEI (TheStreet) -- After more than a decade of pushing vehicle owners to step on it, governments in China are now telling them to slow down.

China's auto industry still can't find the brake pedal but may finally let up on the gas, having a limited impact through year's end on foreign vehicle brands popular among Chinese motorists.

Here's what's going on: Eight Chinese cities will join an existing four in limiting purchases of private vehicles as a pollution control measure, the country's state-run media say, citing the China Association of Automobile Manufacturers.

That increase in urban private ownership restrictions might cut vehicle sales by 400,000, or 2% of total domestic sales, the China Daily newspaper says, citing association Deputy Secretary General Shi Jianhua.

But then Zacks Investment Research cites the same association as saying nationwide auto sales went up 11.2% last month, more than 9.8% in May.

Sales of cars, still powered by China's go-buy stimulus package in 2009, increased in June because prices came down. Lower prices "partially offset" vehicle purchase deterrents such as a credit shortage, the slowing Chinese economy and the very same restrictions on vehicle ownership, Zacks said in a commentary for Nasdaq.com on July 11.

Limited access to credit may have motivated car sellers to give discounts to clear stock and meet sales quotas, one industry analyst in Asia suggested.

American and Japanese brands have fared particularly well this year to date. Sales of American vehicles rose 12.7% to 1.8 million units in the first half of 2013 while vehicles made under the Japanese flag sold 16.5% higher, at 2.3 million units.

Ford (F), General Motors (GM), Toyota (TM), Honda (HMC) and Nissan (NSANY) led that trend, Zacks says.

China encouraged its people to buy cars from the 1990s as proof of national wealth to the outside world. But since then it has faced mounting air pollution as well as legendary traffic gridlock (waiting four or five turns at a single signal) and a scramble for fuel sources from abroad.

Now the question is whether the widening net of vehicle ownership restrictions has caught up with these companies, and if so to what degree. It's hard to make a clear case either way yet. To look at it one way, Chinese cities have gotten more serious about controlling pollution and traffic congestion amid citizen complaints that increasingly tarnish the image of their leaders.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,089.07 -24.47 -0.14%
S&P 500 1,983.86 +0.33 0.02%
NASDAQ 4,462.8370 +6.8210 0.15%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs