China 2010 Auto Sales Reach 18 Million, Extend Lead

China’s vehicle sales jumped 32 percent in 2010 as government stimulus measures and economic growth helped the nation stay the world’s largest auto market for a second year.

Total auto sales, which include cars, trucks and buses, rose to 18.06 million, while passenger-car deliveries gained 33 percent to 13.8 million, the China Association of Automobile Manufacturers said today. Sales of cars and light trucks in the U.S. gained 11 percent to 11.6 million in 2010, according to researcher Autodata Corp.

China’s annual vehicle sales jumped about 10-fold in the past decade as rising affluence and government stimulus policies boosted demand. The pace of growth may slow in 2011 after the nation withdrew tax breaks and rural subsidies that helped it overtake the U.S. auto market, said Jenny Gu, an analyst at J.D. Power & Associates.

“The pace of sales growth in the past two years was abnormal and driven by government policies,” said Shanghai- based Gu. “With the removal of those incentives, passenger-car growth may fall to about 10 percent a year during the next four years.”

20 Million

In December, total vehicle sales gained 17.9 percent to 1.67 million units, the association said. Passenger-car sales rose 18.6 percent, to 1.3 million units, it said.

Growth will be around 10 to 15 percent this year, the association said today. China’s total auto sales may reach 20 million in 2011, Booz & Co. and Nomura Holdings Inc. forecast.

In contrast, light-vehicle sales in the U.S. may be as much as 12.8 million units, according to Ashvin Chotai, the London- based managing director of Intelligence Asia Automotive.

U.S. light vehicle sales peaked in 2000 with annual deliveries of 17.4 million vehicles.

The pace of growth in China may fluctuate in the first quarter, Gu Xianghua, the auto association’s deputy secretary general, told reporters in Beijing today. More cities may follow Beijing’s example and impose restrictions on car ownership to curb traffic congestion, he said.

China this month raised sales tax on vehicles with engines of 1.6 liters or smaller to 10 percent from 7.5 percent this year. Subsidies given for trade-in vehicles and to rural residents to buy vehicles were also phased out.

‘Pretty Big Difficulties’

Chinese carmakers will face “pretty big difficulties” this year after the government scrapped stimulus measures, Dong Yang, vice chairman of the association, said at the press conference in Beijing.

While Chinese automakers who gained the most from state subsidies may experience slower growth this year, General Motors Co. and Volkswagen AG, the two largest foreign automakers in the country, may benefit because they sell a wider range of vehicles, said Klaus Paur, China managing director of automotive at consultant Synovate Motoresearch in Shanghai.

More expensive models from overseas carmakers will also experience growing demand, he said.

China may have overtaken Japan to become the world’s second-largest economy last year with GDP estimated to have grown about 10 percent, according to a Bloomberg survey of 18 economists. The country has grown at an average 11.4 percent pace over the past five years.

GM boosted sales in the country 29 percent to 2.35 million units last year, the company said last week. GM expects sales this year to grow as much as 15 percent, according toKevin Wale, president of its local operations.

SAIC Motor Corp., a partner of GM and the largest Chinese carmaker, said last week that it sold 3.58 million vehicles including those made with partners in 2010, an increase of 31 percent from 2009.

--Tian Ying. With assistance from Alan Ohnsman in Los Angeles. and Liza Lin in Shanghai. Editors: Vipin V. Nair, Ian Rowley.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at +86-10-6649-7571 or ytian@bloomberg.net

To contact the editors responsible for this story: Kae Inoue at kinoue@bloomberg.net

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