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By THE ASSOCIATED PRESS (CP)
SHANGHAI, China — China widened its lead over the U.S. as the world's biggest auto market in January, with passenger car sales more than doubling to 1.32 million vehicles, an industry group reported Tuesday.
Spurred by tax cuts and other government stimulus measures, January's passenger car sales rose 18 per cent from December's 1.1 million vehicles sold and were up 116 per cent from the same month of 2009.
Total vehicle sales, including larger vehicles, also more than doubled from last year to 1.66 million units, the China Association of Automobile Manufacturers said.
That compared with the 735,000 reported in January 2009, when sales in the Chinese market first overtook those in the U.S.
U.S. auto sales rose a modest 6 per cent in January, but that was up from a 26-year low of 656,976 a year before.
Beijing ignited sales last year with a series of policies aimed at encouraging car owners to trade in older vehicles, in many case three-wheel trucks, for more fuel-efficient small cars.
That helped push total vehicle sales up 45 per cent to an estimated 13.6 million in 2009, overtaking the American market as sales there languished.
The recovery in China's broader economy appears to be buoying demand, especially in inland regions that are growing more affluent as industries expand from the coastal areas to reach broader domestic markets.
The huge year-on-year jump in January sales also reflected relatively weak sales and production a year earlier, when China's economy had slowed due to the global financial crisis.
A rush to buy cars ahead of the Feb. 14 Lunar New Year, the country's biggest holiday, also contributed. But sales could fall off once the holiday is past, analysts say.
"We need to keep an eye on the data for February and March," said Wei Chenggang, an analyst at Shanghai Securities, in Shanghai.
"Given expectations that inflation may rise, people may spend less. And sales growth will fall slightly compared with the dramatic rise last year," Wei said.
The auto industry group stood by its estimate for sales totalling at least 15 million this year. But it also cautioned against assuming January will be typical for the year.
"January does not tell us what the whole year will be like, since the broader economy faces various uncertainties," the association said in a statement.
As automakers run at nearly full capacity, struggling to keep up with demand, there are few signs of fallout in China from Toyota Motor Corp.'s recall woes in other markets.
Toyota, which announced a Chinese recall of 75,552 RAV4 sport-utility vehicles in late January due to the same gas pedal problem as elsewhere, saw sales climb 53 per cent in January from a year earlier to 72,000 units.
The company says it expects its China sales to climb to 800,000 units this year from 709,000 in 2009.
But analysts say many in the Chinese industry are watching closely to see how the company handles the problem, viewing it as a lesson on the risks of fast expansion.
"Given the trends here, domestic automakers are keen to expand their manufacturing quickly, but they realize they need to keep a close eye on quality control," said Wei.
Associated Press researcher Ji Chen contributed to this report.