China August Auto Sales Gain 11% as Economic Growth Rebounds

China’s passenger-vehicle sales gained the most in four months in August, led by sales of sport utility vehicles, as the world’s second-biggest economy rebounds from a two-quarter slowdown.

Wholesale deliveries of cars, multipurpose and sport utility vehicles climbed 11 percent to 1.35 million units last month, the biggest gain since April, according to the state-backed China Association of Automobile Manufacturers today. That compared with the median estimate of 1.36 million units by five analysts surveyed by Bloomberg News.

China’s economy is picking up after Premier Li Keqiang announced support measures such as tax cuts for small businesses and extra spending on railways. The auto association is predicting total vehicle sales in the country to exceed 20 million units this year for the first time.

“We are confident that SUV sales are on a structural uptrend in China,” said Cheam Tze Shen, a CIMB analyst in Hong Kong. “The penetration rate is low.”

Total sales of vehicles, including buses and trucks, gained 10 percent to 1.65 million units last month, the association said. In the first eight months of the year, 13.9 million vehicles were delivered, putting sales on track to reach the 20 million units estimated by the association.

Sales of SUVs jumped 46 percent to 240,100 units last month, while deliveries of multipurpose vehicles surged 162 percent to 105,600 units. Sedan deliveries gained 4 percent to 899,100 vehicles.

Focus Popularity

Ford Motor Co. (F)’s Focus was the best-selling sedan last month, with Great Wall Motor Co. (2333)’s Haval line remaining the nation’s top-selling SUV.

General Motors Co. (GM), the largest foreign automaker in China, reported sales growth accelerated in the country last month, helped by demand for its Wuling and Buick vehicles. Total sales in August climbed 11.2 percent, after expanding 11.1 percent the preceding month, the Detroit-based company said last week.

Japanese automakers continued to lag behind other foreign automakers. Next week marks one year since demonstrations erupted across China against Japan’s purchase of a group of disputed islands.

Toyota Motor Corp. (7203)’s sales in the country fell 4.2 percent, while Honda Motor Co. (7267) declined 2.5 percent.

Sales growth may be capped as more cities in China consider ownership restrictions to reduce air pollution and congestion.

Beijing will reduce the number of car license plates it issues starting next year to help ease pollution and traffic congestion, the official Xinhua News Agency reported Sept. 4.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net; Alexandra Ho in Shanghai at aho113@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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