China Beats US at Car Sales

Although many doubted the potential of the world's biggest continent to beat US when it comes to car sales, it seems that the impossible turned into possible and China vehicle sales managed to top the US' for the first time in history last month.

Thus, car sales in China totaled 735,000 last month, bloomberg,com reported. Even if the number represents a decline by 14.5 percent, it is still a very good result when compared to a 37 percent plunge to 656,693 in the U.S., the world’s largest auto market last year.

“This just shows how important China has become to the world’s automakers,” said Yale Zhang, director of CSM Asia in Shanghai. “Still, it’s very unlikely that China will stay ahead for the full year. The U.S. has a much bigger consumer market.”

Apparently, the results are not really surprising as a lot of factors contributed to China's top position, including government's incentives to boost the auto industry. China has abolished road tolls, halved a tax on smaller cars and lowered retail fuel prices. In addition, export-fueled economic growth above 10 percent made General Motors Corp. and Volkswagen AG cars affordable to more people.

“The government has adopted some effective measures to boost auto industry,” said Zhang. “It should eventually trigger a sales rebound.”

More importantly, the demand has fallen among the Chinese less than in the US as a 4 trillion yuan ($585 billion) stimulus package helps the country better cope with the global recession.

However, there are voices who think China shouldn't boast about its great achievement too much. “China shouldn’t be that proud of having the top position,” said Zhang Xin, an analyst at Guotai Junan Securities Co. in Beijing. “Overseas carmakers including GM and Volkswagen contribute a lot to the sales growth.”

In fact, Chinese automakers are  suffering from increasing domestic competition. The nation’s own-brand vehicles lost market share last year as foreign rivals cut prices to boost car sales.
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