News Analysis: China car market skids after Tianjin blasts

The Tianjin warehouse blasts could put the brakes on the domestic automobile market as the suspension of Tianjin Port will affect the import of cars and parts.

Tianjin Port is the world's fourth largest in terms of throughput and handled 40 percent of China's car imports in 2014. With imports through the port more or less grinding to a halt, dealers and manufacturers alike are predicting a looming shortfall of imported cars and parts.

Car manufacturers with production facilities damaged by the blasts, such as Toyota, are likely to see their output, and consequently annual sales, affected.

FAW-Toyota, a joint venture between Toyota and China's First Automobile Works, sold 62,333 vehicles in July, up 13.3 percent year on year. The odds that it will report overall stellar growth this year, however, now look slim after it was forced to suspended operations at several of its plants.

One of the factories affected manufactures the Corolla and Vios models, which account for two thirds of FAW-Toyota's China sales.

Car dealers are feeling the pinch too. Some 10,000 imported cars were destroyed or damaged by the blasts, including 2,700 Volkswagens and 1,500 Renaults. These blackened shells represent some 4 billion yuan (6.3 billion U.S. dollars) in losses to dealers.

It is, however, unlikely to cause immediate supply shortage due to healthy inventories - one upside of a sluggish market.

In the first half of this year, 523,000 imported cars were sold in China, down 23.3 percent, according to China Automobile Dealers Association (CADA).

"In July, dealers reported sufficient inventories for another two months," said CADA official Wang Cun.

"However, complications could arise if operations at Tianjin Port do not return to normal within six to 12 months," Wang added.

While dealers could use other ports such as Guangzhou, Shanghai or Dalian, concerned murmurs, over whether logistic firms are equipped to handle the sudden increase, hang heavy in the air.

"Last week's accident sounded an alarm heard by the whole industry. From now on, our assessments of locations will be more stringent," said Zhang Heqing, chief operating officer of 99maiche.com, an online car dealer. Endi