Auto Sales in China Top 18 Million in 2010

For 2011 prediction is for growth of 10%-15%, as small car tax rose to 10% and Beijing slashed the number of new registrations allowed in the capital this year

A new record was set for the world's largest car market as sales rose more than 32% in 2010 to 18.06 million units, an industry group said on Jan. 10

Sales in December rose 17.9% from a year earlier to 1.67 million units, the China Association of Automobile Manufacturers (CAAM) said.

China overtook the United States in 2009 to become the world's largest car market and is a key market for foreign manufacturers. GM, Ford and Volkswagen all posted record sales in the country last year.

"The strong growth... was due to both policy incentives and frontloaded consumption as consumers were concerned about the withdrawal of policies," CAAM said.

Beijing introduced stimulus policies aimed at supporting the auto market during the global financial crisis. Consumers worried authorities would scrap these measures this year snapped up cars in 2010.

CAAM forecast sales and production would grow at a steadier pace in 2011, by between 10% and 15%, after the government raised the purchase tax for small cars to 10% and Beijing slashed the number of new registrations allowed in the capital this year.

But analysts said the policy changes would have a limited impact on overall car sales, with demand in second and third-tier cities expected to continue growing strongly.

"Car ownership per 100 families is around 30 to 40 in Beijing but the national average is only around 12," said Chen Yin, a Shanghai-based analyst with investment consulting firm CEBM Group. "That is not going to change the trend of growing demand for cars in China given the low ratio of car ownership... and increasing income level. The growth rate for 2011 will reach 10%."

General Motors said its sales in China increased 28.8% year-on-year in 2010 to a new annual record of 2.35 million vehicles. Its manufacturing joint ventures and major brands all set new annual sales marks, the company said earlier this month.

Volkswagen said its sales soared 37% year-on-year in 2010 to an annual record of more than 1.9 million cars.

Beijing announced last month that only 240,000 new number plates will be issued in the capital this year, compared with the record 800,000 automobiles that took to the streets of the city last year. The new system is aimed at easing pollution and chronic gridlock that often turns parts of the capital into parking lots.

But Chen remained optimistic about the Beijing market, saying: "We do not see the new policy eliminating people's intention to buy new cars."

Other major cities are introducing measures to deal with worsening traffic snarls as a growing number of people buy their slice of the middle-class dream. In the southern city of Guangzhou, authorities are trying to reduce traffic by ordering cars off the roads based on the last digit of the license plate.

Copyright Agence France-Presse, 2011

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