Thursday, February 12, 2009

China’s January Car Sales Overtake Leading Market, U.S.

China’s January Car Sales Overtake Leading Market, U.S.

China car sales topped the U.S. for the first time last January totalling 735,500, a 14% drop, the China Association of Automobile Manufacturers said on Tuesday in an e-mailed statement today. That compares with a 37% plunge to 656,693 in the U.S., the world’s largest auto market last year.

Chinese vehicle sales have leapfrogged fivefold over the past decade as export-fuelled economic growth above 10% made General Motors Corp. and Volkswagen AG cars affordable to more people. This year, demand has fallen less than in the U.S. following on a 4 trillion Yuan (585 billion US dollars) stimulus package which is helping the country avoid the worst of the global recession.

“This just shows how important China has become to the world’s automakers,” said Yale Zhang, director of CSM Asia in Shanghai. “Still, it’s very unlikely that China will stay ahead for the full year. The U.S. has a much bigger consumer market.”

U.S. auto sales fell 18% last year to 13.2 million. China sales increased 6.7% to 9.38 million, according to the association, which represents automakers active in the country. Sales may grow 5% this year, the slowest pace since 1998, according to the group.

Chinese passenger-car sales fell 7.8% in January to 610,600 which is the fifth drop in six months.

However the worldwide auto sales slowdown, which prompted GM and Toyota Motor Corp. to curb production and fire staff, has spread to China as the widening global recession saps demand for the country’s exports.

In a bid to revive domestic vehicle demand, China has abolished road tolls, halved a tax on smaller cars and lowered retail fuel prices. “The government has adopted some effective measures to boost the auto industry,” said Zhang. “It should eventually trigger a sales rebound.”

Chinese automakers are also suffering from increasing domestic competition. The country’s own-brand vehicles lost market share last year as foreign rivals slashed prices to offset slowing global demand. Foreign automakers have to build cars in China through ventures with local partners under a government policy designed to help develop the domestic industry.

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