China’s May car sales volume up 34%, further increases expected

10 June 2009 11:24  [Source: ICIS news]

SHANGHAI (ICIS news)--China’s auto sales volume in May rose by 34% year on year to 1.12m units, with growth likely to continue in the coming months due to the tax cut on car purchases and government subsidies, according to a trade association and an analyst on Wednesday.

“Unlike the US, the auto market this year in China could still remain a strong sales growth mainly due to the stimulus measures from the government,” said Li Jun, an analyst with Shanghai-based brokerage firm Guosen Securities.

China cut the purchase tax on cars with engine sizes at or under1.6 litres to 5% from 10% effective from 20 January, as part of a fiscal stimulus plan geared toward the auto industry.

The government has also provided subsidies to farmers who buy smaller cars and incentives for consumers to replace their automobiles.

“The [sales of smaller cars]… will show a robust and stable growth this year, and demand in towns and counties in the next few months will rise gradually with a recovering economy. These factors will boost China’s auto sales,” Li said.

China produced 1.11m automobiles in May, up 29.6% from last year, according to the data released by China Association of Automobile Manufacturers yesterday.

China’s exports of cars, however, faced a sharp decline in May due to falling demand in the overseas market.

The country’s volume of auto exports in May fell 64.36% year on year to 24,000 units, the association said.

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By: Judith Wang
+65 6780 4359

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