January car sales surprise

08:55, February 10, 2010      

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Despite down predictions on how the auto market would fare in 2010, robust vehicles sales from 2009 carried over to the first month of this year.

January unit sales hit 1.66 million, up 124 percent over a year earlier, said Dong Yang, deputy director general of the China Association of Automobile Manufacturers (CAAM).

A total of 1.32 million passenger vehicles, including sedans, MPVs, SUVs, and crossovers were sold in January, up 110 percent year-on-year.

Unit sales of commercial vehicles hit 348,200, an increase of 180 percent over the same period last year.
Last year's five top selling brands, SAIC Motor, FAW Group, Dongfeng Motor, Chang'an Motor and Beijing Automotive, remained the bestsellers in the first month, though their ranking shuffled.

SAIC Motor and Beijing Automotive kept their rankings of first and fifth with unit sales of 306,700 and 123,800, respectively. Chang'an took second place with 259,200 units sold, followed by FAW Group at 238,500 and Dongfeng at 220,100.

Dong attributed the booming auto market to an improving macroeconomy, government stimulus and the traditional sales boom between New Year's Day and the Spring Festival.

Purchase tax breaks for passenger vehicles with small engines have been raised from a discount rate of 5 percent to 7.5 percent. Used car owners who want to buy new vehicles with engines 1.6 liters or smaller can receive both a subsidy as well as a purchase tax break. Subsidies to auto sales in rural areas were also extended till the end of 2011.

Robust demand emptied automakers' inventories late last year. Many orders placed in December were met in January, Dong added.

Sales of small vehicles with engines 1.6 liters and smaller grew steadily in January, with a 25 percent increase to 941,000 units.

A total of 252,200 crossovers were sold last month, up 95 percent year-on-year, benefiting from both purchase tax breaks and subsidies to auto sales in the countryside.

Dong predicts there will be a 10 percent increase in the output of autos.

"The first quarter will tell 2010 China auto sales, particularly the influence of reduced tax breaks on small vehicle sales. We cannot foresee the market trend from January and February sales only," Dong said, cautioning that the influence of the macroeconomy and governmental stimulus plans cannot be ignored.

China's vehicle sales in 2009 rocketed 46.15 percent to 13.64 million, making the nation the world's biggest auto market, a title held by the US for years.

Analysts attributed the high growth in China's 2009 auto market to a low base in 2008.

Jia Xinguang, an independent auto analyst, wrote in his blog on Sohu.com that unlike placid market performance from March to November last year, the nation's 2010 auto market would witness seasonal fluctuations.

"March sales will be the highest this year. Sales will slide smoothly from April to August, climb in September and October, and slow in the last two months," Jia said.

FAW, Dongfeng, Chang'an, Beijing Automotive, Guangzhou Automobile and Geely are expecting around a 20 percent sales increase this year. Brilliance, Jianghuai, Chery and Great Wall's confidence in the country's auto market is even stronger: They expect a more than 40 percent increase.

Rao Da, secretary general of the China Passenger Car Association, is expecting to see a 25 percent increase in both sales and production this year.

Dong cautioned automakers should give quality control and service the highest priority whether they are selling well or poorly, expanding or tightening.

Source:Global Times
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