China Passenger Car Sales Up 84 Percent

Passenger car sales totaled 1.22 million units, up 5 percent from December, China Passenger Car Association reported, as buyers took advantage of tax breaks and incentives.

SHANGHAI (AP) -- China's passenger car sales rose 84 percent in January from a year earlier as buyers took advantage of tax breaks and other incentives ahead of the Chinese New Year, a research group said Friday.

Passenger car sales totaled 1.22 million units for the month, the Shanghai-based China Passenger Car Association reported, citing data from automakers. Sales rose 5 percent from 1.16 million units in December, it said.

Official data on total vehicle sales for January are due next week.

China's total vehicle sales soared 45 percent last year to an estimated 13.6 million, overtaking the U.S. as the world's biggest auto market. Most analysts expect growth to exceed 10 percent this year, but to fall short of last year's stunning recovery.

Rao Da, who heads the private research group, said he expects roughly 20 percent growth in total vehicle sales this year.

A large share of sales are small passenger cars and minivans used by farming families and small businesses -- the focus of tax cuts and other policies aimed at spurring sales of fuel-efficient vehicles.

January's 84 percent growth in part reflected a relatively low base -- China's economy slowed in early 2009 as exports stalled amid the global financial crisis.

Growth in output of passenger cars was also distorted by last year's slowdown, which prompted automakers to slow production in the first half of the year. Since sales rebounded later in the year, car makers have been scrambling to keep up with demand.

China produced 1.24 million passenger cars in January, up a whopping 172 percent from the year before and 5.4 percent higher than in December.

Scanty inventories and long backlogs have prompted some automakers to announce plans for new plants, raising worries that excess new capacity might lead to a glut if sales growth slackens.

But Rao Da. who heads the China Passenger Car Association, said he expects sales to remain robust as long as the government continues to grant tax concessions and subsidies for auto purchases.

"I don't think we need to worry about the overcapacity problem for now, as long as the stimulus policy is not changed," he said.

Associated Press writer Ji Chen contributed to this report.

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