China's July PV sales rise 70.5%, most since 2006

China's passenger-vehicles sales rose 70.5 percent in July, the biggest gain since January 2006, as tax cuts and government subsidies spurred demand in the world's third-largest economy.

Automakers sold 832,596 cars, sport-utility vehicles and other passenger vehicles last month, the China Association of Automobile Manufacturers said today. Overall vehicle sales, including trucks and buses, rose 64 percent from a year earlier to 1.09 million.

Car sales have risen more than 45 percent for the past three months after the government cut retail taxes and began handing out subsidies to reverse a demand slump. General Motors Co., the largest overseas automaker in China, and Nissan Motor Co. both intend to add capacity in the country, which is set to surpass the U.S. as the world's largest auto market this year.

"Sales in the second half will continue to be strong, even if there's a slight slowdown in growth rates," said Ricon Xia, an analyst at Daiwa Research Institute in Shanghai. "Not only has demand for small cars been good, bigger vehicles have started to recover as well."

Car sales jumped 47 percent in May and 48 percent in June. The July figure was 4.6 percent lower than the June tally. In the first seven months, sales rose 31 percent to 5.37 million, the automakers' group said in a statement.

SAIC Motor Corp., China's biggest domestic automaker and a GM partner, has more than tripled this year in Shanghai trading. It fell 5.6 percent to 17.27 yuan today before the sales figures were announced. Dongfeng Motor Group Co., the largest automaker listed in Hong Kong, lost 4.4 percent to HK$7.59 in the city.

GM, China FAW

GM boosted sales 78 percent last month after rural subsidies spurred demand for minivans, which account for about 60 percent of its sales. The Detroit-based automaker expects to form a commercial-vehicle venture with China FAW Group Corp. by the end of the year, its head of international operations, Nick Reilly, said earlier this month.

Nissan and partner Dongfeng Motor announced plans on July 29 to build a new plant in Guangzhou, southern China. The factory will raise their venture's total capacity to 700,000 vehicles a year.

China's overall vehicle sales rose 23 percent in the first seven months to 7.2 million. By contrast, U.S. sales slumped 32 percent to 5.8 million. Congress has approved a bill to inject $2 billion more into a 'cash for clunkers' program to help revive demand.