China Auto Sales Slow In 2010; Market Still No. 1

By Salon Staff

Published January 12, 2012 8:27AM (EST)

SHANGHAI (AP) — Vehicle sales in China rose a scant 2.5 percent in 2011 as higher prices and traffic controls kept buyers out of showrooms, but the market remained the world's biggest.

The China Association of Automobile Manufacturers reported Thursday that total vehicle sales rose to 18.5 million last year, up from 18 million in 2010, when sales rose 32 percent.

In contrast, U.S. auto sales jumped 10 percent to 12.8 million vehicles in 2011. China overtook the U.S. as the biggest market by number of new vehicles sold in 2009.

The expiration of tax incentives and subsidies, along with restrictions on car purchases in Beijing, slowed sales, which had grown at a double-digit pace every year since 1999 — apart from in 2008. Sales that year, at the height of the global crisis, rose 6.7 percent.

Car sales in China soared in 2010 after the government cut sales taxes and offered subsidies to spur demand, but growth slowed once the incentives ended.

"This data was what we expected," said Jia Xinguang, managing director of the China Automobile Dealers Association, attributing the slowdown mainly to the end of preferential policies for car purchases.

In the long run, the auto industry's development will not be limited by market demand or economic growth, "but by severe traffic congestion, air pollution and energy shortages," said Jia.

But he and other analysts say they expect growth to continue, given the relatively low level of vehicle ownership among increasingly affluent families.

Another industry group, the China Passenger Car Association, reported earlier this week that passenger car sales, which exclude buses and heavy trucks, rose 2.8 percent last year to 13.7 million vehicles.

Sales of SUVs jumped 25 percent, to 1.5 million, it said, while sales of sedans rose 3.6 percent to 9.6 million units. But the once-roaring boom in sales of vans and minivans collapsed, with minivan sales plunging nearly 11 percent to 2.1 million units.

The malaise has hit domestic automakers hardest, with Japanese and U.S. car makers enjoying a reputation for higher quality and brand value.

General Motors Co. and Ford Motor Co. earlier reported strong December sales in China though full-year growth fell.

Sales of GM-branded vehicles by the company and its Chinese partners rose 8.3 percent in 2011 to a new record of 2.5 million vehicles.

Ford's sales for the year climbed 7 percent to 519,390 vehicles.


Associated Press researcher Fu Ting contributed.

Salon Staff

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