China Auto Sales Grow Again Amid Intense Competition

China passenger vehicle sales for the first half of 2011 rose 5.3 percent year-on-year, erasing fears that 2011 would be the first year of falling sales after sales were virtually flat in April and May.

Domestic sales of cars, sports-utility vehicles, multi-purpose vehicles and minivans totaled 6,641,229 units, according to the China Passenger Car Association (CPCA). June sales rose 3.5 percent to 1,020,589 units after flat sales in April and May as government incentives came to an end.

But this year’s sales growth remains anemic compared to the 46 percent leap in 2009 and 32 percent surge in 2010.

“The current market performance is what the government expects,” said Rao Da, secretary-general of the CPCA. “So it is unlikely to launch new incentive measures to spur sales in the second half.”

“The second half of this year will see Japanese automakers pushing sales as production returns to normal,” said Namrita Chow, senior analyst with consulting firm IHS Automotive.

China’s passenger vehicle sales are expected to grow by 10 percent, year-on-year, in the second half of this year, according to a projection by UBS in line with its prediction for an average 11 percent annual capacity increase over the next three years.

“Competition in China is likely to intensify in the coming months as the Japanese look to regain lost ground and the South Koreans will fight to keep newly acquired market share, while international automakers, such as General Motors and Volkswagen, will pull out all the stops to keep their current strong foothold,” Chow told China Daily.

General Motors, China’s leading foreign carmaker, reported sales of 1,273,502 units during the first half of 2011, a 5.3 percent rise over last year.

The sales of its venture Shanghai GM jumped 25 percent year-on-year during the first half to 600,002 units. But Shanghai-GM-Wuling’s minivan sales were down 5.4 percent year-on-year to 641,324 units.

“The sales data show that GM’s passenger car ventures in China are still making profits for the US automaker, prompting it to strengthen its production capacity in the country,” Chow said.

South Korean automakers Hyundai and Kia both reported adding to their market shares in June on growing sales.