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China’s Passenger Car Sales Soared 47% in May 2009 on Government Initiatives
Jul 06, 2009

Passenger car sales in China registered impressive growth of 47% in May 2009 on account of stimulus measures taken by the government and good performance of small cars.

According to the statistics released by the China Association of Automobile Manufacturers, passenger car sales in China rose to 829,100 Units at a growth rate of 47% in May 2009.

The credit of unprecedented rise in passenger car sales during May 2009 goes to sedans that grew 42.4% to 591,300 Units compared to the sales recorded in the same month last year. The sales of crossover vehicles also showed strong growth at 84% year-on-year to 172,600 Units. SUVs sales flared up 25.8% to 47,700 Units.

Passenger car sales from January to May 2009 scaled up 21% to 3.36 Million Units whereas the total automobile sales surged 14.3% to 4.96 Million Units. Moreover, the motor vehicle production in January-May 2009 climbed up by 11.10% to 4.8377 Million Units from the corresponding period last year.

The government's measures to stimulate the demand fueled the auto sales in May 2009. In February 2009, the government announced several stimulus measures such as 50% reduction in sales tax on car with 1.6 Liter engine and rebates for rural buyers. Apart from this, customers, who had delayed hefty purchases amidst tough credit conditions, changed their minds and those, who had no plans to buy, visited showrooms.

The Chinese automobile market, world's biggest market, recorded the lowest year-on-year growth in 2008 over a decade due to the global financial crisis. However, the market has started to recover since February 2009 in the backdrop of the government's support measures.

While car sales in developed market are continuously plummeting, China is posting strong increment. For instance, new car registrations dropped significantly in Japan by 19% to 178,503 Units in May 2009 and Europe recorded 12% decline to 1.25 Million Units in April 2009.

According to the China Passenger Car Association, China's automobile sales are expected to cross the previous projected target of 10 Million Units to climb up to 11 Million Units in 2009.

A Senior Research Analyst at RNCOS said, "Steady growth in the Chinese auto sales has put the industry back on track. In view of higher sales recorded in the past few months, the second half of 2009 is likely to bring in more positive news for the auto industry. In fact, the industry could grow at a double-digit growth rate in the future."

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