China car sales growth may slow next year

Following a robust September when China's auto sales soared 78 percent from a year earlier, the China Association of Automobile Manufacturers (CAAM) now forecasts that auto sales in the country would surpass 12 million for the full year of 2009.

Many global automakers are getting by in this economic crisis partly because of the continued sales boost the auto industry is experiencing in China. However, analysts fear that this interest may end as early as next year. It is understood that the huge demand is mainly propelled by government incentives, and as these incentives are reported to be phased out in 2010, the sales boom might well end with it.

In an Autonews report, Qin Xuwe, Orient Securities analyst, said that auto sales rely heavily on policies and so it's difficult to predict sales outlook for next year. It's still unknown whether the government would renew the tax cuts for small cars after they expired at the yearend.

If the Chinese government decides to continue its scheme for example in cutting sales tax on mid-range sedans next year, it would evidently mean another happy year for carmakers worldwide. But a Reuters report says that China fears its economy will stretch beyond its capacity and may very soon choose to put an end to the tax incentives. Therefore analysts say next year's sales aren't expected to surpass the 2009 record but the industry will still grow, albeit at a slower pace.