News Room - Business/Economics

Posted on 12 Jan 2010

China tops US in 2009 auto sales

China’s vehicle sales surged past United States tally to reach record levels last year on government incentives, and automakers are poised for solid but slower growth in the world’s fastest growing major auto market this year.

 

After a landmark year in which Chinese automakers made some major acquisitions abroad, Beijing’s policy incentives to bolster demand will likely keep it as a bright spot for car manufacturers battered by the financial crisis.

 

Vehicle sales in the country jumped to a record 13.6 million units last year, the China Association of Automobile Manufacturers said yesterday — well above the country’s previous target of 10 million units.

 

That compared with annual sales of 10.4 million cars and light trucks sold in the US, the lowest level in 27 years.

 

The Chinese tally, which includes heavy vehicles, is still higher than that of the US after deducting roughly 650,000 heavy trucks, Orient Securities said.

 

“Sales have been extremely hot in most parts of last year... Many people have to wait for weeks or even months to get their cars,” said Qin Xuwen, an analyst with Orient Securities.

 

China’s passenger car sales jumped by 52.9 per cent to 10.3 million units last year. Last month alone, car sales surged 88.7 per cent to 1.1 million units, topping one million units in monthly sales for the third time during the year.

 

Analysts attributed the boom largely to Beijing’s policy initiatives, which had effectively lifted market sentiment and attracted buyers back to showrooms.

 

A low base in 2008, when car sales slowed to a single-digit growth rate for the first time in at least 10 years, also helped inflate the 2009 growth rate.

 

The market, they said, would return to a slower but more rational growth rate of roughly 10 per cent this year on continued policy support from the government, even though the renewed tax incentives for small cars were not as aggressive as expected.

 

BYD, 10 per cent owned by tycoon Warren Buffett’s Berkshire Hathaway, raised its 2010 sales target last week after achieving its 2009 sales goal ahead of time.

 

It now aims to sell 800,000 vehicles next year, up from a previous target of 700,000 units, Paul Lin, manager of the company’s marketing department, told Reuters.

 

The past year has seen Chinese automakers venturing on to the global stage for the first time in a major way, ready to snap up big-name brands, such as Volvo and Hummer. But Chinese automakers are still facing an uphill battle to become truly global players, industry observers said.

 

“There are a lot of question marks here as they don’t even have a solid brand in their home market,” said Klaus Paur, director of global industry consultant TNS’ North Asia Automotive.