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China overtakes US as world's largest car market

Video by Catherine Nicholson

Text by News Wires

Latest update : 2010-01-11

New figures published today show that China has overtaken the United States as the world's biggest market for cars, thanks partly to government incentives. Yet analysts warned that sales of Chinese vehicles would slow over the next 12 months.

AFP - China's auto sales surged past those in the United States in 2009 to make the Asian nation the world's biggest car market, industry data showed Monday, but analysts warned sales would slow this year.

The China Association of Automobile Manufacturers said more than 13.64 million units were sold last year, marking an increase of 46.15 percent from the 9.4 million units sold in 2008, Xinhua news agency reported.

Auto output for 2009 increased 48.3 percent to 13.79 million units, Xinhua said. Calls to CAAM to confirm the figures went unanswered.

In the US, auto sales fell 21.2 percent to 10.43 million vehicles in 2009, according to Autodata figures released last week.

Analysts welcomed the news, but warned that China car sales could hit the brakes this year.

"We are still optimistic about the outlook for this year but it will be quite difficult to achieve the growth rates of 2009," John Zeng, a Shanghai-based analyst at IHS Global Insight, told AFP.

"This year will see a high single-digits growth rate of nine to 10 percent."

China's car sales -- which outstripped those of the United States for the first time in January last year, making the nation the world's biggest auto market -- soared in 2009 due partly to government incentives.

John Bonnell, a director of J.D. Power Asia-Pacific Forecasting in Bangkok, said he expected sales to increase by seven percent in 2010 as the government continued to support the sector through tax breaks and subsidies.

"I think with such tremendous growth in China in 2009, a lot of it unexpected given the economic conditions, you might expect a slowdown or a pullback," Bonnell told AFP

"Our thinking is that the government is going to continue to support and continue to provide incentives to ensure that the industry continues to grow."

Sedans made up 56 percent of total auto sales in 2009, with Shanghai Volkswagen, a joint venture between Volkswagen AG and China's SAIC, selling the most, Xinhua said in a separate brief dispatch without identifying its source.

Several foreign auto manufacturers last week reported massive increases in their China sales -- in contrast with sharp falls in their home markets.

US auto giant General Motors said sales surged 66.9 percent to 1.83 million vehicles in 2009, while Ford Motor Company and its Chinese partners said sales rose 44 percent to more than 440,000 units.

Volkswagen, the biggest European carmaker, said its Chinese sales soared 36.7 percent to a record 1.4 million vehicles.

Auto sales have surged in recent years due to rising incomes that have put private car ownership -- once an unthinkable luxury -- within reach for millions.

In Beijing alone, the number of registered cars topped four million in December, meaning a quarter of the capital's 16 million permanent residents have cars.

Government incentives included slashing taxes on cars with engines smaller than 1.6 litres and subsidising clean-technology vehicles. The government also subsidised auto purchases for farmers.

Date created : 2010-01-11

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