China automakers add capacity as sales rise

Chinese auto sales are set to grow faster than expected this year, with some industry insiders now picking growth of 20 percent in the world's largest car market, raising talk Beijing will cut incentives to cool growth.

China's car sales zoomed nearly 50 percent last year, defying falling sales in the rest of the world, thanks in part to a series of government measures designed to stimulate spending during the global downturn.

Sales have continued to show strong growth this year, up 76 percent in the first three months, according to government data.

Industry watchers were initially predicting 10-15 percent growth for this year, but many have started revising those expectation upwards.

BYD, China's eighth largest car maker, is now expecting China's auto sales to grow by about 20 percent this year, said Henry Li, general manager of the company's export division.

Li was talking on the sidelines of an industry forum just before the start of this year's Beijing auto show, China's largest and the first held since it surpassed the United States last year to become the world's largest auto market.

Most of the world's top auto makers, including GM GM.UL, Ford, Toyota and Volkswagen, will attend, alongside China's own field of increasingly muscular names like SAIC Motor, BYD and Geely Automobile.

Li attributed his bullish forecast for this year to especially strong demand in China's smaller cities, which he expects will continue for the next five years.

BYD, formerly known for its cellphone batteries, has come from nowhere to become one of China's top selling automakers, selling nearly 450,000 vehicles last year, up 162 percent. Its F3 was the nation's best selling vehicle model.

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