Slowing economy, high fuel costs dent China car market

By Fang Yan

SHANGHAI (Reuters) - China's car market, the world's second largest, is losing speed more quickly than expected due to a slowing economy, rising fuel prices and natural disasters, raising the prospect that sales growth could halve this year.

Growing by at least 20 percent a year for the past three years, China has been one of the few bright spots for General Motors Corp (GM.N) and other global auto giants as they struggle with a slump in U.S. and European markets.

But sales growth in July slowed to a single-digit rate for the first time in two years. This may be the shape of things to come, even with a renewed focus on growth by China's economic policy makers.

"It's slowing down more than we anticipated," said John Bonnell, director of J.D. Power Asia Pacific Forecasting.

"Our forecast from the beginning of the year was about 15 percent growth, or about 6.2 million passenger vehicles. We just revised our forecast down to about 5.95 million units."

In July, sales of sedans, multipurpose vehicles and sport utility vehicles in China climbed 6.79 percent from a year earlier, the smallest monthly gain in two years and well below annual growth of 20-30 percent since 2005.

For a graphic on China car sales, click

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