Auto prices in China rise to 4-year high last month

Shanghai, February 11 (Gasgoo.com) China's vehicle prices rose 1.3% last month, the most since late 2005, as government incentives continued to boost demand in the Chinese auto market, now the world's biggest, Bloomberg reported today.

"The January price hike is a surprise," Cheng Xiaodong, an official with the National Development and Reform Commission's vehicle-price monitoring division, said today in Beijing. "But it may not last as production will be picking up over the coming months."

The higher auto prices eased concerns about competition and overcapacity denting profits. China's vehicle sales more than doubled (up 124%) last month from a year earlier to 1.66 million units as the government continued its stimulus measures such as subsidies and tax cuts.

Prices of passenger vehicles grew 0.82% in January from a year earlier and 2.33% from December, Cheng said. As automakers boost production, price wars may re-emerge in the second half and prices may fall about 0.5% by the end of this year, he added.

A later lunar new year helped boost January sales this year. The weeklong national holiday starts in mid-February this year while it was in late January last year. More customers would buy cars in the run-up to the Chinese New Year (or Spring Festival).