Chinese Are Piling Money Into Stocks Instead of Buying Cars

on June 9 2015 | in Daily Headlines Trending | by | with No Comments

The stockbroker is beating the car salesman in the battle for Chinese wallets.

With China’s stock market more than doubling in the past year, consumers like Tom Zhang are deferring big-ticket purchases to chase the rally. The Beijing resident was deciding between a Buick and a Volkswagen Passat before concluding his 300,000 yuan ($48,000) would be better off in equities. He was right, as his holdings soared to 800,000 yuan in value in little more than a year.

“I feel like I am good at this, that I can make more,” Zhang, 26, said as he left a branch of Qilu Securities Co. in Beijing. “Why would I kill the hen when there are more eggs on the way? I can always buy my car later.”
Investors have opened almost as many stock accounts this year through May 22 as in the previous four years combined. The stampede into equities is the latest factor slowing auto demand in the world’s largest market, where sales last month rose at the slowest pace in more than two years.

“The stock market is like a pump that sucked up all the money,” Cui Dongshu, secretary general of China’s Passenger Car Association, said in a phone interview. “People are not buying cars, no matter how big the incentives. People want their money in the stock market.”

The slowdown would have been more pronounced had automakers from General Motors Co. to Volkswagen AG not cut prices to encourage sales. Besides discounts, foreign automakers are offering incentives such as subsidized insurance, zero down payment, interest-free financing and higher trade-in prices, according to Sanford C. Bernstein.

GM reported a 4 percent drop in May sales in China, its largest market, despite cutting prices on 40 models across its Buick, Chevrolet and Cadillac models in April. By comparison, the Detroit-based automaker posted a bigger-than-estimated sales increase of 3 percent at home in the U.S., helped by an improved job market and relatively cheap gasoline.

Chinese automakers, in a role reversal, are the bright spot in the numbers. Long the choice of last resort among consumers, local automakers are riding the global wave of demand for sport-utility vehicles by offering cheaper alternatives to models offered by the foreign makes.

Read more at Bloomberg Business.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

« »

Get Your Copy of the June 2015 China Consumer & Retail Monthly

Follow Us

Daily Updates By Email

Latest Posts

Scroll to top