China auto industry little affected by earthquake

Last week's earthquake will have a limited impact on China's auto industry as Sichuan Province accounts for only around four percent of the country's vehicle demand, Morgan Stanley said.

Still, passenger vehicle companies with relatively high exposure to Sichuan - including Dongfeng PSA Citroen, Suzuki's joint ventures and Changan Auto - will suffer in the short-term, it said.

"Before the recovery of consumer confidence - we expect at least 1-2 quarters - there is little possibility of delivering notable sales in Sichuan province, which accounts for around four percent of the nationwide passenger vehicle market," Morgan Stanley said in a note.

However, truck makers like Sinotruk and Weichai Power are expected to benefit from upcoming demand for infrastructure and housing reconstruction, the note said.

"Propelled by the forthcoming post-earthquake reconstruction of infrastructure and housing, truck sales are expected to trend up further. Sales outlook for large displacement diesel engines will also be driven up by the surging demand for construction machines," it said.

The upper and luxury passenger vehicle segment will be the least affected because of its limited exposure to the Sichuan market, Morgan Stanley said, adding that Denway Motors has the highest average selling price and least exposure to the province of all auto companies under its coverage.

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