China's Jan passenger car sales edge up m/m

China's passenger car sales in January edged up from the previous month, helped by government policies to boost sales as the economy slumps, an industry group said on Friday.

A total of 647,594 cars, including sport utility vehicles, were sold in January, up 0.5 percent from 644,083 in December, data from the China Passenger Car Association showed.

January sales fell 0.2 percent from a year ago, but the comparison was distorted by a week-long Lunar New Year holiday, which occurred in January this year but in February 2008.

"January data look pretty good. Many people postponed their car purchases to this year, when previously announced policy incentives take effect," said Rao Da, the association's secretary general.

To help bolster China's car sales growth, which turned negative in late 2008 after years of double-digit growth, the government unveiled a raft of policies including halving the purchase tax on cars with engine sizes below 1.6 litres.

Rao predicted strong growth in February as more people made delayed purchases. But he warned that it was too early to assume the momentum would extend into the rest of this year.

"Demand for small cars may remain strong in coming months because of the tax incentives, but cars with bigger engines could move slowly without further incentives," Rao told reporters.

The association's January number put Chinese sales at almost the same level as sales in the United States, the world's biggest auto market. U.S. light vehicle sales slumped 40 percent from a year earlier last month to 653,215 vehicles, according to U.S. data released this week. [ID:nN03540214]

The China Association of Automobile Manufacturers, another industry group, is expected to announce its own, more widely watched January car sales data next week. Its figures may differ from the data provided by the passenger car association.