China car demand eases but future still strong

China's auto sales are going to roar ahead for the foreseeable future despite signs of cooling demand in the world's largest car market, experts say.

After last year's breakneck growth in sales, consumers are holding back as the world's third-largest economy slows down and massive government stimulus measures including car-buying incentives are scaled back, they say.

But foreign automakers faced with weak global sales are still confident in the Chinese market, with some boosting production capacity as they bank on increased long term demand from the nation's expanding middle class.

"The China market is huge. Even after the explosive growth last year, there is still significant potential in second and third-tier cities," said Jenny Gu, a Shanghai-based analyst at auto industry consultants J.D. Power and Associates.

Auto sales totalled 9.02 million units in the first half, up 48 percent from a year ago, according to the China Association of Automobile Manufacturers.

Sales have slowed since the start of the year, from a 124 percent on-year increase in January to just a 17.2 percent jump in July, but 2010 sales are still forecast to top 15 million units -- about a 20 percent on-year increase.

"The Chinese are the only ones in good shape," Scott Laprise, a Beijing-based analyst at CLSA, told AFP.

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