Manufacturing News

Chinese Auto Sales Hit Record 1.1 Million

Auto sales rose 5 percent to 1.11 million in March, exceeding U.S. sales for the third month, as tax cuts and rebates for small car purchases lured buyers to showrooms.

China's auto sales hit a monthly record of 1.11 million vehicles in March, exceeding U.S. sales for the third month in a row, as tax cuts and rebates for small car purchases lured buyers back into showrooms, according to industry figures.
The China Association of Automobile Manufacturers said sales rose 5 percent in March from a year earlier, when they totaled 1.06 million, the official Xinhua News Agency reported.
The data confirmed that sales remained robust in China, the world's second biggest auto market, despite deteriorating conditions in most major markets.
Americans bought 857,735 new vehicles in March, down 37 percent from the 1.36 million sold in the same month a year earlier, according to Autodata Corp.
But a 25 percent jump in U.S. sales from February has raised hopes that the worst may be over for an industry battered by global economic malaise and financial catastrophe.
China is bound to eventually overtake the U.S. as the world's largest auto market, and recent developments have accelerated that trend.
Based on the figure reported Thursday, first quarter sales in China totaled roughly 2.67 million units. Sales of small vehicles with engines of 1.6 liters or less accounted for about 70 percent of the total, the report said.
To counter a slowdown late last year, the government halved taxes on purchases of small autos and is spending 5 billion yuan (about $730 million) on subsidies for purchases of light trucks and minivans in the countryside, where most of China's 1.3 billion people live.
"The smaller vehicles got a big boost from the policy to support the rural areas," said John Bonnell, an analyst with automotive research firm J.D. Powers and Associates.
Still, he said the data were surprisingly strong given the weakness in the broader economy.
"If you look at the economic data, there were very few reasons to be optimistic," he said.
China's good fortune is a balm for ailing General Motors Corp., which reported Wednesday that it sold 137,004 vehicles in China in March, up 24.6 percent from a year earlier, despite its miseries back home. Its minivehicle joint venture, SAIC-GM-Wuling, saw sales surge 38 percent to 90,784 vehicles.
Kevin Wale, president and managing director of the GM China Group, attributed the strong showing to a wide product lineup, and forecast that the company will double its sales, to more than 2 million a year, by 2014.
"This is an ambitious target, but we have all the key fundamentals in place," Wale told a gathering of local reporters, noting that GM plans to launch or upgrade more than 30 models in China over those five years.
Trucks and buses make up a larger share of China's sales than those of the United States or Japan. Some observers say that makes direct comparisons misleading. But many rural Chinese do use such commercial vehicles for everyday family driving.
The larger sales figures for China also obscure the fact that most of its dozens of automakers are small manufacturers serving mainly regional markets.
So far, none of the domestic car manufacturers have managed to meet rigorous U.S. safety standards, and most Chinese vehicle exports go to other developing markets in the Middle East, Latin America and Africa.
But China's automakers are investing heavily in new technology and tie-ups with foreign market leaders while also launching electric and other alternative fuel vehicles. Meanwhile, they face ever intensifying competition from foreign automakers that are zeroing in on the China market for lack of strong alternatives elsewhere.
"If China is the biggest market or the U.S. is the biggest market, it doesn't matter," said Ulrich Walker, chairman & CEO for Daimler Northeast Asia.
But such indicators are crucial to marketing strategies, he said.
"You have to know which is the biggest market because you have to tailor your products to fit," Walker said Wednesday as Daimler launched its Smart minicar in China, one of a slew of models due to debut in China before and during the April 20-28 Shanghai auto show.

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