China's Economy Might Be No. 1 Now But Auto Sales Have Slowed

Dec 05, 2014 02:10 PM EST | Jordan Ecarma

Chinese car dealerships are at "overcapacity" as passenger-vehicle sales slow and inventories rise.

Vehicle deliveries in the world's biggest auto market rose 5 percent to 1.71 million units last month, a drop from October's 9.3 percent growth rate, Bloomberg News reported.

"There are more and more auto dealers selling vehicles at losses as they struggle to keep afloat," Wang Ji, a Beijing-based director at the China Auto Dealers Chamber of Commerce, told Bloomberg. "Overcapacity is the fundamental reason behind the production surplus and unless they fix it, there will be a reshuffle of auto dealers and automakers sooner or later."

Carmakers have been announcing plans to boost production in China, with Volkswagen and BMW both recently detailing bigger delivery targets. Volkswagen last month said it planned to increase capacity at its Chinese plant from the former target of 4 million cars a year by 2018, while BMW said over the summer that production in China would increase from 300,000 units to 400,000.

The lukewarm auto sales report comes as China slides into the No. 1 spot as the world's largest economy, overtaking U.S. production in the latest International Monetary Fund numbers, according to the Wall Street Journal's MarketWatch.

China's national economic output as measured in goods and services comes to $17.6 trillion for the year, topping America's $17.4 trillion in production. The U.S. produced almost thrice as much in goods and services compared with China as recently as 2010, MarketWatch reported.

According to the latest figures, China's production now accounts for 16.5 percent of the world's economy "when measured in real purchasing-power terms." The U.S. holds 16.3 percent.

In 2013, China topped the U.S. in global trade for the first time.

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