Auto sales rise 15.3% but slump is expected

09:38, February 15, 2011      

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PASSENGER car sales in China totaled 1.4 million units in January, up 15.3 percent from a year earlier, according to the China Passenger Car Association yesterday.

However, passenger car sales, including automobiles, multi-purpose vehicles, sport-utility vehicles and minivans, fell 4.8 percent from December as government incentives ended and cities restrained vehicle purchases to ease traffic problems.

All categories, except minivans, reported negative growth in January from a month earlier with the biggest drop in car sales, which fell 10.3 percent to 965,238 units.

China's auto sales surged 32 percent to more than 18 million units last year, driven by government stimulus measures including favorable tax rebates on fuel-efficient vehicles as well as subsidies for rural purchases.

Industry analysts expect market growth to slow this year now that incentives have expired and cities like Beijing have introduced policies to limit the number of cars purchased each month to deal with gridlocked streets.

Rao Da, the association's secretary general, said the withdrawal of government incentives will lead to a drop in vehicle sales.

"January's record sales were an extension of last year's market boom and the sales cooled notably at the end of last month," he said. "The negative growth month to month and a rising inventory show signs of a slumping market."

The association predicted February sales would drop 35 percent from January, which would be the largest decline on record, due to the Chinese New Year holiday.

Shanghai General Motors was the top seller among domestic car makers with 131,944 vehicles sold last month. It was followed by Shanghai Volkswagen and FAW Volkswagen, which sold 100,108 units and 91,288 units respectively.

Despite the end of the government stimulus, the China Association of Automobile Manufacturers earlier said auto sales may still increase 10 to 15 percent this year due to solid demand.

Source:Shanghai Daily
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