Auto sales jumped 45 percent in China during the first half of the year as the booming economy and increased incomes continued to fuel demand.

 

China's automakers sold 2.45 million cars, sport utility vehicles, multi-purpose vehicles and minivans from January to June, compared with 1.69 million in the same period last year.

 

Production rose in tandem, expanding 44.2 percent to 2.57 million units in this year's first half.

 

In addition to the effects of the growing economy, auto sales also benefited from government initiatives, including the lifting of restrictions on small-engine vehicles and tariff cuts on imported models.

 

Passenger car sales grew 56 percent to 1.77 million units in the first six months while SUVs increased 68 percent to 109,173 units. There were 86,151 MPVs sold in the period, up 60 percent from a year earlier.

 

"Explosive" growth

 

"The explosive sales came mainly in the first four months after a market rebound that started last September," said Rao Da, secretary of the Union of National Passenger Car Market Information.

 

In the first quarter, car sales jumped 54 percent to 1.2 million units.

 

But a slowdown occurred in June as price cuts tied to an influx of new models caused some buyers to delay their purchase plans and await further inducements.

 

June car sales tailed off to 379,907 units, 83,540 fewer than in May.

 

Carmakers including Mazda, Ford and Honda announced price reductions on their mainstream models by up to 10 percent, ranging from 10,000 yuan (US$1,250) to 20,000 yuan, in a move to increase competitiveness before the arrival of Toyota's Camry on the domestic market.

 

The price war also extended to the mid-class segment when monthly sales of the Junjie sedan made by Brilliance Auto, the domestic partner of BMW in China, grew from 600 units in March to 6,000 in June.

 

The massive price cuts led to a 1 percent drop in car prices in June from a month earlier.

 

Rao estimated car sales will surge again in the second half of the year as the latest round of price wars on mid-class and premier models is expected to stall out by the end of July.

 

(Shanghai Daily July 7, 2006)