Chinese sales back in top gear

THE world’s largest new-vehicle market appears to be running in top gear again, jumping 16 per cent in May over the same month last year.

This increase took the year-to-date rise to 1.7 per cent compared with the January-May period last year, according to figures released by the China Association of Automobile Manufacturers.

Although the Chinese market was adversely affected a year ago by supply issues associated with the Japanese tsunami and earthquakes, dropping 4.0 per cent in May 2011, this year’s monthly tally of 1.62 million exceeded the May 2010 total of 1.44 million by 12.5 per cent.

Passenger car sales accelerated faster than commercial vehicles in May, jumping 22.6 per cent to 1.28 million for the month and taking the YTD increase to 5.5 per cent.

Total vehicle sales in China this year have amounted to 8.02 million units, with passenger vehicles accounting for 6.33 million.

After years of double-digit growth, culminating in a 32 per cent increase in 2010, the Chinese government suppressed growth by rolling back incentives while some cities imposed tougher restrictions on vehicle numbers to help ease chronic traffic congestion and pollution.

This resulted in more modest results in 2011, with only 2.5 per cent growth to 18.51 million units for the year.

Foreign brands appear to have fared better, with analysts suggesting that China’s growing middle class views them as being more prestigious and of better quality than home-grown brands.

General Motors, which was the first foreign manufacturer in China, sold 2.5 million vehicles there last year and last month reported a 21.3 per cent gain over May last year to 231,183 vehicles.

More than half were minivans sold by its SAIC-GM-Wuling joint venture, which saw sales soar 36 per cent to 127,749 vehicles in May.

Shanghai-based SAIC was last year listed as the top automotive enterprise in China.

The sudden sales growth in May came in the wake of the Beijing auto show in late April and amid speculation that Chinese authorities might soon reinstate subsidies for car buyers who swap older vehicles for new, more energy-efficient ones.

China’s economic growth fell to a nearly three-year low of 8.1 per cent in the first quarter, but analysts have warned that any increase in sales sparked by subsidies could simply go to foreign car-makers and might worsen local production overcapacity.

Government sources are said to be working on steps to limit the small-car subsidies to rural areas, where sales generally favour Chinese manufacturers.