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Chinese Stimulus Package Raised Car Sales 25% in February 2009
Mar 24, 2009

Government’s effective policies and stimulus package paved the way for growth in new car sales in China that rose 25% in February 2009.

According to China Association of Automobile Manufacturers (CAAM), new car sales in China increased by 25% in February 2009 as government measures helped car manufacturers to offset the globally declining auto sales, as reported by BBC.

Sales of buses, trucks and passenger cars rose to 827,600 Units, representing an increase of 12% over the January 2009 sales and 25% increase from February 2008. In the first two months of 2009, the sales figure rose 2.7% to reach 1.56 Million Units against 39% decline to 1.35 Million Units in the US. 

This significant increase in China’s car sales was mainly led by the reduction in sales tax on passenger cars with small engines. The reduction was aimed to boost the sales of fuel-efficient vehicles in the country. Consequently, China recorded higher number of car sales in February than any other nation across the globe. Additionally, the Chinese government has outlined plans to grant automobile subsidies in the rural areas in an attempt to revive the demand following the slow growth in auto sales in 2008.

The aforesaid policies coupled with the government’s $585 Billion economic stimulus package have given momentum to the growth in the Chinese auto market as these initiatives boosted consumer confidence. Moreover, passenger vehicles with engines lesser than 1.6 Liters constituted 70% of the country’s total passenger vehicle market. In other words, growth in the sales of small-engine cars contributed significantly in the growth of Chinese auto market.

However, some industry experts are saying that a single month’s sales figure cannot be taken as an evidence of sustained bounce-back of demand, so they remain cautious about the outlook of the market. The government’s initiatives are enough to encourage automakers and even better figures are expected in March 2009.

According to a Research Analyst at RNCOS, “Chinese car industry registered very impressive sales in February 2009, indicating that new measures are having a positive impact on the market. But China will have to take more steps to boost domestic market in the wake of economic crunch and because the demand for Beijing’s low-priced goods have slumped drastically.”

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