China '09 auto sales may rise 28% to 12 mln units

China's vehicle sales may rise 28 percent this year, according to the nation's top planning agency, likely enough for the country to surpass the U.S. as the world's largest auto market.

Full-year sales may reach as high as 12 million vehicles, Chen Bin, chief director of the industry coordination department at the National Development and Reform Commission, said today at a conference in Tianjin. U.S. sales will likely be around 10.5 million, according to both General Motors Co. and Ford Motor Co.

China has boosted auto sales this year through tax cuts and subsidies as a part of a wider 4 trillion yuan ($586 billion) stimulus that has shielded the country from the worst of the global recession. U.S. sales have slumped 28 percent, pushing the old GM and Chrysler LLC into bankruptcy.

"Government incentives have really helped China's auto sales this year," said Li Chunbo, a Beijing-based analyst with Citic Securities Co. "There's also still a lot of demand for vehicles in rural areas."

Li added that full-year sales could reach as high as 12.5 million vehicles. GM, the largest overseas automaker in China, last week increased its target to as much as 12 million after doubling its own August sales from a year earlier.

Nationwide sales topped 8 million in the first eight months, NDRC's Chen said. U.S. sales slumped to 7.1 million as drivers pared spending amid rising job concerns. Chinese sales of cars, sport-utility vehicles and other passenger vehicles jumped 71 percent in July to 832,596.

Second-half sales "will be somewhat better than the first half," said Li. He expects stimulus measures to be extended into next year "because the government has made it clear that the auto industry is still important for the country."