First-Quarter Car Sales Drop 2% in China

Deliveries of new passenger vehicles in China declined 2% to 5.56 million units in January-March, according to the China Passenger Car Assn.

A sales tax rate hike contributed to the shrinkage. But analysts say another key factor was pressure to boycott South Korea’s Hyundai and Kia brands because of rising tensions between that country and China ally North Korea.

Hyundai-Kia account for about 5% of the market’s volume. Wholesales by the two brands dropped by 80,000 units last month, resulting in a 4-point drop in the total passenger-car market, Bloomberg News says.

CPCA says year-on-year retail sales declined in March in every category except SUV/crossovers, which grew 15%. That segment now accounts for about 40% of total passenger vehicle sales in China.