China monthly auto sales overtake US for 1st time

[February 10, 2009]  SHANGHAI (AP) -- China's monthly vehicle sales surpassed those in the United States for the first time in January, moving this country closer to becoming the world's biggest auto market, data released Tuesday showed.

With its growing middle class and vast potential as a consumer market, China is vital for General Motors, Volkswagen and Toyota as they count on demand here to offset weakness in the U.S. and elsewhere.

But China's ascent in the global auto market has been hastened by the plunge in U.S. auto sales, which tumbled 37 percent in January to a 26-year low of 656,976 units.

Chinese vehicle sales also have cooled, but hardly as dramatically. In January, 735,000 vehicles were sold, down 14.4 percent from a monthly record 860,000 last January, the China Association of Automobile Manufacturers said.

Mike DiGiovanni, General Motors Corp.'s executive director of global market and industry analysis, said last week he expected Chinese auto sales could hit 10.7 million units in 2009, more than his estimate of 9.8 million unit sales in the U.S. this year. Autodata forecasts 2009 U.S. sales at 9.57 million.

China's vehicle market has grown dramatically in recent years, overtaking Japan in 2006 to become the world's second-largest by annual sales. With 1.3 billion people, China will inevitably leapfrog the U.S., with a population of 300 million, into the No. 1 spot, industry experts say.

Still, if American car demand revives in coming months, the United States will remain the world's largest market by annual sales -- at least for another year.

China's best-selling automakers are GM and Germany's Volkswagen AG but its own ambitious producers, such as Chery Automobile Co., are growing fast.

General Motors says it sold a record 1.09 million vehicles in China, up 6 percent from 2008.

January sales in China were 0.8 percent below those in December and well below the 790,000 some analysts had anticipated.

To spur the slowing auto market here, the government has rolled out measures to help boost vehicle sales as part of a multibillion-dollar economic stimulus package while it also tries to promote cleaner, more energy-efficient engines.

The sales tax on cars with engines less than 1.6 liters has been cut by half to 5 percent through the end of the year. The government also is spending 5 billion yuan (about $730 million) on subsidies to farmers to replace three-wheeled vehicles or outdated trucks with small, 1.3-liter or less vehicles.

Another 10 billion yuan ($1.5 billion) is going into upgrading automakers' technology and developing alternative energy vehicles.

In 2008, China's auto sales grew 6.7 percent from the previous to 9.38 million units -- the first time growth has fallen below 10 percent since 1999.

Trucks and buses make up a larger share of China's sales than those of the United States or Japan. Some observers say that makes direct comparisons misleading. But many rural Chinese use such commercial vehicles for everyday family use.

[Associated Press; By ELAINE KURTENBACH]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.