China car sales boom overtakes US figures

Tuesday, 21 December 2010

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Car sales are expected to keep booming in China next year as it consolidates its position as the world's largest market.

It overtook the US last year with sales surging 45% to 13.6m vehicles.

Monthly figures this year have seen double-digit percentage growth and analysts are forecasting sales may climb roughly 30% to about 17m vehicles for the full year.

Such explosive growth may not continue in 2011 because a tax cut on new vehicle purchases is expected to end. But a rebate on cars with small engines will stay in place, as the government seeks to encourage people to drive more fuel-efficient vehicles.

The forecasts came as the country's second major car show this year opened yesterday in the southern city of Guangzhou.

"We think the fundamentals of growth in China are very strong," said Kevin Wale, president and managing director for GM China. He cites an economy that is expected to expand 8% or more annually, coupled with high consumer confidence and a global economy that is starting to rebound.

"The Chinese have developed a love affair with the car," he said.

By the time 2010 is over, Mr Wale explained, GM will have sold about 2.3m cars in China, while next year sales will climb about 10% to more than 2.5m.

"I expect there will be a rush to buy cars before the tax goes up at the end of the year, then an adjustment period and then back to normal," said Richard Baker, deputy manager of Ford's joint venture in China with Chang'an Automobile Group and Mazda.