Chinese Auto Boom, to Slow Down in 2010

The 2009 record interest the Chinese market has manifested towards the auto industry may be just a passing miracle, and may end as soon as next year. At least this is what analysts believe, as they think the drive behind the ever increasing sales were the government incentives, in danger of being phased out in 2010.

"Auto sales rely heavily on policies, just like the stock market. It's hard to predict sales outlook for next year as we don't know whether the government would renew the tax cuts for small cars after they expired at the year end," Qin Xuwe, Orient Securities analyst was quoted as saying by Autonews. "If they indeed cut sales tax on mid-range sedans next year as many had hoped, it could be another bumper year ahead."

According to Reuters, the Chinese government itself may be the one to knowingly put an end to the miracle, fearing that otherwise the economy may stretch beyond its real capabilities. This is already obvious, as September saw an increase in vehicle sales of no less than 83 percent, jumping well over the 1 million units sold.

The 2009 boom will indeed not repeat next year, but mostly due to the fact that 2010 sales will be reffered to a much bigger market. This doesn't mean that the industry will not continue to grow, but it will do so at a slower pace, analyst think.

"It's true that government policies have helped push up auto sales this year, and weak demand in 2008 also played a role in it," Ji Junfeng, Changjiang Securities analyst added.