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China’s March Car Sales ‘Below’ Expectations as Incentives End

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April 10 (Bloomberg) -- China’s passenger-car sales grew in March at a pace that was below forecasts after incentives ended and fuel prices rose, the China Association of Automobile Manufacturers said.

Dispatches of cars including multipurpose vehicles and sport-utility vehicles to dealerships rose 6.52 percent from a year earlier to 1.3 million units, the association said in a statement today. That pace was about one-tenth of the 63 percent sales increase reported in March of last year.

“The overall vehicle sales growth in March was below our expectations,” Zhu Yiping, the association’s statistics head, said at a briefing in Beijing today. March has historically been a peak period for car sales in China following the week-long Chinese New Year holiday that was celebrated this year from Feb. 2 through Feb. 8, according to the association.

General Motors Co., China’s biggest overseas automaker, posted slower sales growth in the nation for the second month in March as the government reinstated a 10 percent sales tax and phased out subsidies for vehicle trade-ins in rural areas. Last year, overall auto sales surged 32 percent to a record 18.1 million, helping the nation stay the world’s largest vehicle market for the second year.

“Car sales growth may continue to slow for a few more months as customers brought forward purchases to the end of last year,” said Harry Chen, an analyst with Guotai Junan Securities Co. in Shenzhen. “The pace may pick up again in the second half as potential demand is still there.”

Slowing Growth

Sales growth in China this year may fall short of the association’s previous estimate for an increase of 10 percent to 15 percent, said Dong Yang, vice chairman of the association.

“I am concerned about whether our growth rate is too low,” Dong said. “Some automakers’ profitability may be undermined this year and some may even face difficulties in their operations.”

Total vehicle sales gained 5.4 percent in March to 1.8 million units, the auto group said. Vehicle sales for the first quarter increased 8.1 percent to 5 million units.

Passenger car sales during the first quarter rose 9.1 percent to 3.8 million units, according to the association.

China this month raised interest rates for the fourth time in less than six months in a bid to rein in inflation. Economic growth may slow this year to 9.6 percent and to 9.2 percent next year from last year’s 10.3 percent pace, the Asia Development Bank said in a report last week.

The government on April 7 increased retail gasoline and diesel prices for the second time this year after oil advanced to a 30-month high.

GM China Sales

GM sold 233,014 vehicles in China last month, the Detroit-based company said April 2. Deliveries barely rose from March 2010’s 230,048 and followed a 6 percent increase in February.

Honda Motor Co.’s sales fell 5.3 percent last month from a year earlier to 58,611 units, the automaker said April 6. BYD Co., the automaker backed by Warren Buffett, reported a 41 percent plunge in March sales.

Ford Motor Co. boosted sales in China 20 percent to 53,440 units in March. Deliveries of Ford-brand vehicles by Changan Ford Mazda Automobile, the Dearborn, Michigan-based company’s Chinese passenger car unit, totaled 42,157 vehicles in March, the carmaker said April 7.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

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

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