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China surpasses US in 2009 auto sales

China surpasses US as biggest auto market in 2009 as stimulus drives sales boom



AP - A man walks on a pedestrian overhead bridge passes vehicles drive on a heavy traffic in Beijing, Friday, ...


By Joe Mcdonald, AP Business Writer , On Friday January 8, 2010, 7:28 am
BEIJING (AP) -- China overtook the United States as the biggest auto market in 2009 and automakers should see more strong growth this year, an industry group reported Friday.

Boosted by Beijing's stimulus, 2009 passenger car sales soared to 10.3 million and total vehicle sales are estimated at 13.6 million, the China Passenger Car Association said. That represents growth of about 45 percent from 2008.

"This is even better than anyone expected," the group's general secretary, Rao Da, said at a news conference in Shanghai.

By contrast, U.S. sales of cars and light trucks plunged 21 percent in 2009 to 10.4 million as a shaky economy kept buyers away from showrooms. It was the first time any country bought more cars than Americans.

The Chinese group's data were in line with forecasts by J.D. Power and Associates of 12.7 million sales of cars and light trucks and 900,000 bigger vehicles in 2009 for a total of 13.6 million. The company in early 2009 expected sales of 9 million vehicles but raised that as Beijing rolled out measures to boost demand.

"It's very, very strong growth, far beyond the expectations we had in the early part of 2009," said John Bonnell, a J.D. Power analyst.

China's status as the top auto market is yet another sign of its rapid rise as a global economic power. After a two-decade economic boom, it is believed to have passed Germany last year as the biggest exporter and is expected to overtake Japan soon as the second-largest economy after the United States.

Global automakers including General Motors Co., Ford Motor Co. and Germany's Volkswagen AG looked to China to help drive revenues as demand elsewhere plunged and U.S. automakers laid off workers and shuttered factories. Volkswagen says China is its biggest market.

GM says 2009 sales by the company and its local partners in China rose 67 percent last year, while Ford says sales were up 44 percent.

China, with 1.3 billion people and a growing urban elite, was long expected to become the top auto market but not until as late as 2020. That date moved up as the U.S. crisis dragged down sales while China continued to grow with the help of a 4 trillion yuan ($586 billion) government stimulus.

Economic growth accelerated to 8.9 percent over a year earlier in the third quarter and the government says it should be 8.3 percent for the full year.

Beijing boosted purchases by slashing sales taxes on smaller, fuel-efficient cars and spending $730 million on subsidies for buyers of SUVs, pickup trucks and minivans. Stimulus spending on building highways and other public works also helped to boost sales of trucks used in construction.

China's monthly purchases exceeded those of the United States for all but two months last year.

Rao said auto sales in 2010 could grow by another 20 percent so long as China's economic recovery continues and oil prices stay stable. Bonnell said J.D. Power expects a lower but still healthy growth of 6 to 7 percent.

"The temptation is to say that with 45 percent growth in 2009 there must be a payback in 2010," Bonnell said. "But all indications are the government wants to continue to stimulate things, and our expectation is they will succeed in doing that."

Automakers are looking to first-time buyers in smaller Chinese cities to help drive sales as incomes outside the country's prosperous east coast rise.

"People there are getting richer and can afford cars. Younger people can work for two or three years and with the help of their parents can buy a car," Rao said. "Being able to afford a car in China is not so difficult any more. People with an average salary can afford to buy a car."

China's small but ambitious automakers are starting to expand abroad and some have set up factories in Ukraine, Iran and other developing markets. Some want to break into U.S. and Western European markets but have yet to satisfy safety and emissions standards.

"We don't see that they are ready, that they are achieving these levels of quality or safety," said Bonnell. "There is no indication that next step is right on the horizon."

Associated Press researcher Ji Chen in Shanghai contributed to this report.



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