China May car sales grow slowest this year

China's passenger car sales rose at their slowest pace this year in May, setting the stage for more moderate growth in 2010 but foreign automakers' interest in the world's biggest car market is unlikely to let up.

China's auto market, which eclipsed the United States last year, has become a safe haven and a key battlefield for foreign carmakers still recovering from a steeper than expected industry downturn.

"There is no doubt that market growth this year will be slower compared with 2009, but no one can afford to lag behind in China as it will remain the fastest growth major market in the world," said Zhang Xin, a Beijing-based analyst with Guotai Junan Securities.

May passenger car sales rose 26 percent from a year earlier, with a total of 1.04 million sedans, vans and sport utility vehicles sold, compared with 1.11 million units moved in April, the official China Association of Automobile Manufacturers (CAAM) said on Tuesday.

The frantic pace of car sales growth in China started tapering off in April when sales rose 33 percent, about half of the pace in March, which analysts attributed to a higher comparative base a year earlier.

A more moderate pace is expected for the rest of the year, given rampant auto sales growth in 2009 especially since the second quarter, propelled by government incentives to boost consumption along with a near $600 billion economic stimulus plan.