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China Auto Sector Shows Signs of Recovery
Jun 10, 2009

China’s automobile production and sales registered back-to-back growth in April and May 2009 on the back of government’s stimulus policies.

China struck record automobile production and sales in March and April 2009. The stimulus packages for the auto industry have helped it to rebound steadily, as reported by People’s Daily.

As per the latest data from the China Association of Automobile Manufacturers (released on May 8, 2009), the country manufactured a total of 3.7248 Million vehicles during January-April 2009, representing a YOY growth of 6.4%. During the same period, 3.8319 Million vehicles were sold, depicting a YOY increase of 9.43%.

Further, production and sales of domestic passenger vehicles was recorded 2.6929 Million and 2.8267 Million during January-April 2009, which represents corresponding YOY growth of 9.75% and 15.09%. However, production and sales of commercial vehicles stood at 1.0319 Million and 1.0052 Million respectively, showing respective YOY decline of 1.46% and 3.86%. The consecutive growth in sales implies that the Chinese automobile industry is gradually returning back on track as government’s stimulus aid for the industry is proving effective. Mini vans and compact cars were the major contributors to the growth of China’s auto industry. More and more buyers opted for them as subsidies or tax incentives were granted on such models. The boom in automobile market indicated that these subsidies bolstered the consumer confidence. 

It is noteworthy that the government implemented its stimulus policies for the auto industry at the beginning of 2009. These policies included subsidies for farmers scrapping their old high-emission trucks and vans for the new fuel-efficient models, as well as slashing tax on purchase of small cars to half.

According to an industry, in the current market scenario and with the government’s positive moves, it seems quite likely for the booming automobile market in China to surpass the sales of 10 Million Units in 2009.

According to a Research Analyst at RNCOS, “The stimulus policies of the government are turning out more effective for the Chinese automobile industry than expected. The record volume growth in March and April 2009 has raised the probability of further growth in the coming months. This suggests that until and unless there is any sudden increase in commodity prices, automakers are likely to see improvement in their bottom lines in 2009.”

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