July 11 – The tight liquidity might have limited impact on the auto dealers in China in the near term because they are increasingly careful in managing inventory levels and cash flows. Overall, the Sino-foreign auto dealerships inventory levels are normalizing, with inventory days averaging 1.4 months in May 2013. However, if the cash crunch continues into Q3 and Q4, it could prevent the auto dealers benefitting from the peak sales seasons. Source: DBS China Auto Sector July 11 – Vehicle sales in China totaled 1.75 million units in June, down 0.4% from a month earlier and up 11.2% from a year earlier. The month on month growth was slower than in May's 4.4% decline, while the year on year increase was faster than May's 9.8% rise. Source: China Association of Automobile Manufacturers July 5 – Sales of 15 major automakers rose 6.1% year on year in China in June. Total industry sales are expected to grow 9% to 1.23 million units in 2013, weaker than its estimate of 1.25 million units last month as the liquidity crunch disrupted inventory funding for some dealers. Retail pricing movements were better than expected in June, with 71% of models reporting declining prices, down from 74% in May. Source: UBS Morning Expresso Asia July 4 – Over 50% of Chinese consumers born after 1980 thought owning and driving a car is necessary in daily life. The percentage is 8 percentage points higher than the overall 42% who held the same view. 55% of potential car buyers are born after 1980, and 30% are born in the 1970s. Source: Tencent survey June 26 – Chinese automotive OEMs expressed surprise at how strong demand for passenger vehicles had been in the year so far but they were cautious about 2H 2013 due to weak economic performance overall. OEMs were proceeding with aggressive capacity expansion plans and dealers were generally upbeat compared with a year ago, with inventories in healthy condition. Macquarie argues that China offers the best growth potential in the world for automakers. Source: Macquarie report: Global Autos in China June 19 – General Motors Co (NYSE: GM) forecast demand for luxury cars in China will grow 4% in 2013, half the pace for the total vehicle market. The slump in demand for luxury items from Swiss watches to sports cars is mainly attributed to a crackdown on lavish spending. Source: Bloomberg June 17 – The Zhejiang provincial government announced draft provisions for urban traffic management, such as the introduction of license restrictions, limits on car usage and a hike in parking charges. In 2012, 1.1 million cars were registered in Zhejiang, or 7.7% of total new car registrations in China. If the regulations become effective, Hangzhou and Ningbo, the 2 largest cities in Zhejiang in terms of new car sales, might be the first cities to be affected, and the regulations might reduce total vehicle sales in China by 1.5%. Source: Goldman Sachs report: China Automobiles June 14 – China produced 9.08 million vehicles and sold 9.03 million vehicles in January-May 2013, up 13.5% and 12.6% respectively from the same period of 2012. Source: Ministry of Industry and Information Technology

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