Sales of passenger cars in China — the world's biggest market — rose 18 percent in August from a year earlier, a report said Tuesday, as government subsidies and price cuts by dealers helped spur demand.
Passenger car sales totaled 1.02 million vehicles in August, said the Shanghai-based China Passenger Car Association, a private research group.
The figures dovetail with those released earlier by a government-affiliated research institute showing sales of all vehicles rose nearly 56 percent in August from a year earlier, to 1.21 million vehicles. That contrasted with a 5 percent decline in August sales in the U.S., according to AutoData Corp.
China's roaring growth in auto sales has slowed in recent months after surging over 60 percent in March: August's 18 percent increase compares with a 16 percent year-on-year increase in July and a 21 percent increase in June, according to the association's figures.
But a government decision to extend subsidies for energy efficient vehicles, plus sharp price cuts by dealers trying to clear inventory, helped support demand, said Rao Da, head of the association.
"Price cuts by Toyota spurred others to also slash prices," said Rao said in an analysis posted on his blog. He noted that the usual pattern of slower sales during the holiday weeks of August has changed as families increasingly opt to buy cars ahead of the school year, which begins on Sept. 1.
Global automakers seeking to offset lagging sales elsewhere have benefited hugely from China's fast-growing market, where sales this year are expected to rise by about 20 percent.
That's perceptibly slower than the 45 percent growth in 2009, and officials are warning that manufacturers may have ramped up production too much as they rushed to keep up with the boom in sales earlier this year.
Over the weekend, Chen Bin of the National Development & Reform Commission, China's planning agency, told an industry conference that the government plans to act to discourage manufacturers expanding further.
China's top 30 car makers plan to more than double annual production capacity to more than 31 million units a year by 2015, up from the 13.6 million units of capacity in 2009, the newspaper People's Daily and other state media cited Chen as saying.
Some automakers shrugged off such worries, saying they are struggling to keep up with demand for some models, while inventories for others grow.
"Automakers are adjusting output to match sales, but there is still some structural overcapacity. For some models, you have to order a month early or put down a deposit in advance, while others sit in warehouses," said Zhang Xin, an autos analyst at Guotai Jun'an Securities, in Beijing.
"It all depends on the models," he said.
The Passenger Car Association said sales of sedans rose 14 percent in August from the year before, to 715,801 units, while sales of sport-utility vehicles soared 77 percent to 119,482 units and those of multipurpose vehicles climbed 72 percent to 33,805 units.
The boom in sales of minivehicles, which took off last year thanks to tax cuts and government subsidies, appears to be waning. They rose 4.5 percent in August to 154,204 vehicles, the report said.
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