China overtakes US for the first time in vehicle sales

04 February 2009

China surpassed the US in vehicle sales for the first time in January, which analysts say may initiate a trend that could make China the world's auto market this year.
 
Official sources will release China's auto sales data only next week but the expectation is that the sales would be around 790,000 units for the month according to analysts.

The US meanwhile has turned dismal data for the auto industry with January sales having tumbled 37 per cent to 656, 976 vehicles the lowest monthly figures for 26 years.

However, some analysts point out that China's vehicle market leans heavily on commercial vehicles such as trucks and buses and the comparison may misleading.
 
It was expected that given the size of the Chinese population, its market would sooner or later surpass that of the US but the latest figures suggest that it is happening sooner than expected.  This is being attributed to the shrinking of the American auto market in the global downturn.

General Motors, one of China's biggest automakers, recorded a new high of 1.09 million vehicles sold in 2008, up 6 percent from the year before. GM which is struggling in its home market has been counting on its China operations after China overtook Japan in 2006 as the second-largest vehicle market in the world. The fast emerging Chinese middle class has been the mainstay of the market growth in the country.

However, there are some trends that suggest that consumers in China are putting big ticket purchases on hold. The Chinese government has stepped in with a slew of measures to halt the slide and the measures seem to be working with last month's sales suggesting a reversal of the negative trend.

Small cars accounted for the bulk of sales in China last year at around 66 per cent of vehicles sold and policy makers are encouraging this trend. The small car trend is helping both domestic and foreign automakers.