China Car Sales Slow in January

Passenger car sales in China slowed in January as tax breaks for fuel-efficient cars ended and over-congested cities tightened the number of new license-plate registrations in order to reduce pollution.

According to a recent report released today Shanghai-based China Passenger Car Association, sales of passenger cars fell 10.3 percent in January from the month before, to 965,238 units. However, on an annual basis, sales rose 12.6 percent.

"Of course the withdrawal of financial incentives would impact any country's auto market, and sales did continue to grow in January, but toward the end of the month there was a sharp cooling in sales," the Passenger Car Association report said.

The Chinese bought 13.7 million cars last year, up by a third from 2009. Yet, the market is expected to grow at a more modest 10 to 15 percent this year, due to the expiration of tax incentives for some vehicle purchases and a renewed effort by cities to bring traffic back under control.

This month, demand is expected to decline even further, according to the report, as this is typically the case with the normal slump that follows the Lunar New Year holiday, which was longer than usual.

Starting with the beginning o this year, the Chinese government has ended sales tax rebates and some subsidies, which spurred huge growth in demand for minivans in the countryside, after they took effect in 2009.

Still, it’s not all bad news, as the country’s large manufacturers are still counting on double-digit growth in China, while most are hoping this will come from the vast rural areas and inland cities, where most families do not own a car yet.
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About the author: Mihnea Radu
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Mihnea's favorite cars have already been built, the so-called modern classics from the '80s and '90s. He also loves local car culture from all over the world, so don't be surprised to see him getting excited about weird Japanese imports, low-rider VWs out of Germany, replicas from Russia or LS swaps down in Florida.
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