China Car Sales Forecast to Rise on Demand From Interior Cities

Updated on
  • Passenger vehicle retail sales totaled 2.5 million last month
  • GM sales increased 13% on popularity of Cadillac, Buick cars

Vehicle sales in China, the world’s biggest automobile market, may accelerate next year as economic expansion helps lift demand from cities and provinces located in the interior parts of the country.

Sales may gain by about 4 percent, twice the pace estimated for the current year, the China Passenger Car Association said Friday. Retail auto sales between January and November grew 1.6 percent to 21.4 million units.

Auto deliveries are set to rise as more consumers in the middle and western regions buy, the trade body said. Car ownership in those regions is still lower than big cities like Beijing. On average 35 cars are owned by 100 households in those area, according to government statistics.

Vehicle sales climbed for the seventh straight month in November as General Motors Co. and Geely Automobile Holdings Ltd. attracted more buyers with upgraded models before the end of a tax reduction in the country. Industrywide retail sales of cars, SUVs and multipurpose vehicles increased 3.2 percent to 2.5 million units last month, according to the China Passenger Car Association.

Customers squeezing in purchases before the expiry of a 2.5 percentage-point cut in the buyers’ tax for small-engine models at the end of this year may drive car sales in December. Automakers are also introducing deep discounts in addition to new models and brands such as Geely’s Lynk & Co. The Beijing price tag for Volkswagen AG’s Golf compact with 1.6-liter engine is now as low as 94,200 yuan ($14,200), a 35 percent discount, according to Autohome, an online pricing website.

“December sales are usually high relative to other months due to seasonality,” said Steve Man, an auto analyst at Bloomberg Intelligence. “This year may get a strong jump because of the likely end of the sales tax cut.”

Among automakers with the strongest sales growth in November, General Motors’ China sales rose 13 percent from a year earlier to 418,225 units, led by demand for the Cadillac and Buick brands.

Geely’s sales gained 38 percent to 141,265 units last month. That boosted its total sales in the first 11 months of the year to 1.09 million vehicles, placing the company on track to surpass its full-year target of 1.1 million units.

— With assistance by Ying Tian, and Yan Zhang

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