Last Updated- Sep 6, 2009 5:19 - - 0 Comments


China car sales to rise 28% in 2009 on stimulus

chrysler-carsChina’s vehicle sales may rise 28 percent this year, according to the nation’s top planning agency, likely enough for the country to surpass the U.S. as the world’s largest auto market.

Full-year sales may reach as high as 12 million vehicles, Chen Bin, chief director of the industry coordination department at the National Development and Reform Commission, said today at a conference in Tianjin. U.S. sales will likely be around 10.5 million, according to both General Motors Co. and Ford Motor Co.

China has boosted auto sales this year through tax cuts and subsidies as a part of a wider 4 trillion yuan ($586 billion) stimulus that has shielded the country from the worst of the global recession. U.S. sales have slumped 28 percent, pushing the old GM and Chrysler LLC into bankruptcy.

“Government incentives have really helped China’s auto sales this year,” said Li Chunbo, a Beijing-based analyst with Citic Securities Co. “There’s also still a lot of demand for vehicles in rural areas.”

Li added that full-year sales could reach as high as 12.5 million vehicles. GM, the largest overseas automaker in China, last week increased its target to as much as 12 million after doubling its own August sales from a year earlier.

Nationwide sales topped 8 million in the first eight months, NDRC’s Chen said. U.S. sales slumped to 7.1 million as drivers pared spending amid rising job concerns. Chinese sales of cars, sport-utility vehicles and other passenger vehicles jumped 71 percent in July to 832,596.

Second-half sales “will be somewhat better than the first half,” said Li. He expects stimulus measures to be extended into next year “because the government has made it clear that the auto industry is still important for the country.”

‘Cash for Clunkers’

In the U.S., the government’s “cash for clunkers” rebates helped cause a 1 percent increase in auto sales last month, the first gain since 2007. Detroit-based GM expects industrywide sales to total 10.5 million this year. Ford’s forecast is 10.5 million to 11 million. Last year’s total was 13.2 million, compared with 9.4 million in China.

The “clunkers” program, which ran from July 27 through Aug. 24, offered buyers of new, more fuel-efficient vehicles as much as $4,500 for trade-ins of older models.

Automakers and investors are focusing on China as it withstands the global slump. GM last month agreed to set up a commercial-vehicle venture with China FAW Group Corp., its third manufacturing deal in the country. The automaker now runs all operations outside North America from Shanghai.

Billionaire Warren Buffett has also bought a stake in BYD Co., a Chinese maker of cars and rechargeable batteries. MidAmerican Energy Holdings Co., a unit of Buffett’s Berkshire Hathaway Inc., wants to boost its stake further, Wang Chuanfu, BYD’s chairman, said on Aug. 31.

Source: Bloomberg

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