Nov. 19 (Bloomberg) -- Automakers in China are seeking government aid and lower sales taxes to help revive waning demand in the world's second-largest vehicle market.

``The situation is really severe,'' said Zeng Qinghong, general manager of Guangzhou Automobile Group Co., a partner of Toyota Motor Corp. and Honda Motor Co., in an interview at the Guangzhou auto show yesterday. ``We hope the government can introduce policies to stimulate demand.''

Chinese automakers join counterparts in the U.S. and Europe in asking for government help as the global recession may stunt sales growth to as little as 5 percent next year, compared with a 22 percent increase last year, according to Guangzhou Auto, Honda and Nissan Motor Co. Slower China sales would also hit overseas automakers as they are banking on emerging markets to offset waning demand in Europe, the U.S. and Japan.

``Chinese automakers do need government's help to survive the turmoil,'' said Zhang Xin, an analyst at Guotai Junan Securities Co. in Beijing. ``There aren't any policies yet for stimulating vehicle consumption and automakers need to shout louder to get the government to provide incentives.''

Toyota, GM

Toyota has lowered its sales target for the year by 100,000 vehicles to 600,000, it said yesterday in a statement. The new goal is 20 percent higher than last year's sales tally. General Motors Corp., the largest overseas vehicle maker in the country, boosted nine-month sales at its local ventures 9.3 percent. Full-year sales rose 19 percent in 2007.

Slowing demand and rising competition has caused SAIC Motor Corp., the nation's biggest domestic automaker, to tumble 77 percent this year in Shanghai trading. The carmaker rose 7 percent today to 6.13 yuan. Dongfeng Motor Group Co., the largest Hong Kong-listed automaker, fell 7.7 percent to HK$1.57, extending losses for the year to 71 percent.

Sales taxes currently account for as much as 50 percent of vehicle prices. The government is considering lowering sales taxes on alternative-energy vehicles to spur demand, Chen Jianguo, deputy head of the industrial coordination department at the National Development and Reform Commission, the nation's top planning agency, said earlier this month. The government's 4 trillion yuan ($586 billion) stimulus package may also help, said Winfried Vahland, Volkswagen's China head.

``It is a good plan as it started early,'' said Vahland. ``I am very supportive of this.'' Volkswagen is the largest overseas carmaker in China.

Slower Growth

Cars sales have surged fivefold in China over the past eight years because of the country's booming economy. Growth slipped to 9 percent in the third quarter, the slowest pace in five years, sparking concerns about job security and reducing people's willingness to commit to buying expensive items, such as cars.

``Everyday, people are watching TV and talking about a global recession,'' said Yasuaki Hashimoto, president of Nissan Motor (China) Ltd. ``This will really affect consumers' thinking.''

The slowing global demand has already caused U.S. automakers to seek $25 billion in loans from the U.S. government to keep them operating. The chief executives of GM, Ford Motor Co. and Chrysler LLC yesterday appeared before the Senate Banking Committee to make their case. Automakers in the U.K., mainly local units of overseas carmakers, are also seeking government measures to stimulate demand.

Still, overseas automakers believe that China's car sales will eventually recover and so they pushing ahead with expansion. Toyota will open the second production line at its venture in Guangzhou in the middle of 2009, as planned, said Feng Xingya, executive vice president of GAC Toyota Motor Co. Volkswagen's venture with China FAW Group Corp., the country's second-largest automaker, has also agreed to buy a plant to add capacity.

``For me, the next half-year is not so important,'' said Vahland. ``If you look at the long run, we are very confident.''

To contact the reporter on this story: Tian Ying in Beijing on ytian@bloomberg.net

Last Updated: November 19, 2008 05:18 EST