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China auto sales growth hits the brakes in 2011
by Staff Writers
Beijing (AFP) Jan 12, 2012

Growth in China's auto sales hit the brakes in 2011, data showed Thursday, after Beijing rolled back sales incentives and some cities imposed restrictions on car numbers.

Total sales in the world's largest auto market rose just 2.5 percent to 18.51 million units last year, the China Association of Automobile Manufacturers said, compared with an increase of more than 32 percent in 2010.

The increase was in line with an earlier forecast by the industry group for growth of two to three percent in 2011.

Sales of passenger vehicles -- which account for the bulk of sales in China -- rose 5.2 percent to 14.5 million units in 2011, the association said in a statement.

After falling for two straight months, auto sales rebounded in December to rise 1.4 percent from a year earlier to 1.69 million units.

Passenger vehicle sales rose 4.6 percent to 1.37 million units last month.

China overtook the United States to become the world's top auto market in 2009 as more and more Chinese realise the middle-class dream of owning their own car.

But the sector lost steam last year after the government phased out sales incentives such as tax breaks for small-engine vehicles and Beijing slashed the number of new registrations allowed in the capital

The southern metropolis of Guangzhou also began ordering cars off the roads, based on the last digit of their licence plate, in a bid to cut pollution and ease traffic congestion.

Sales are expected to rise 8.0 percent in 2012 as the government seeks to boost economic growth and demand from smaller cities strengthens, Dow Jones Newswires said, citing Shi Jianhua, the association's deputy secretary general.

Despite the slowdown in 2011, foreign car makers outperformed their domestic rivals as Chinese consumers increasingly favour high quality vehicles with better safety standards, analysts said.

US auto giant General Motors and its joint ventures in China saw sales rise more than 8.0 percent to a record 2.55 million units last year, while luxury German carmaker Audi said its sales rose 37 percent to 313,036 units.

That compares with Chinese car maker Chery, which saw sales fall 4.0 percent last year and Geely which reported a 1.3 percent increase, said Namrita Chow, an auto analyst at IHS Global Insight.

"The competition is really intensifying and Chinese consumers are choosing their cars more carefully," Chow told AFP.

China has moved to protect its domestic auto industry in recent weeks, slapping import tariffs on some US passenger cars and sports utility vehicles, and saying it would "withdraw support" for foreign investment in the sector.

But this hasn't deterred foreign carmakers from expanding their operations in the massive market.

Germany's Volkswagen Group said last week that it would build a new plant in the eastern city of Ningbo capable of producing 300,000 vehicles annually once the facility is completed by 2014.

French automaker Renault, meanwhile, said it plans to begin building vehicles in China with Chinese partner Dongfeng, likely as early as 2014.

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