China and US auto sales rise in July but analysts urge caution

Passenger car sales in China increased in July as consumers took advantage of new subsidies for fuel-efficient models and discounts from dealers.

Figures produced by the China Automotive Technology and Research Center suggested that 822,300 vehicles were sold during the month, representing a year-on-year rise of 15.4 per cent.

This compares to growth of 10.9 per cent in June, but the group told Bloomberg that the upcoming months could be more problematic as inventories are building up.

Unsold vehicles increased to almost 1.5 million units in the first seven months of the year, up from just under one million units in the period between January and April.

Sheng Ye, Associate Research Director for Greater China at Ipsos, predicted that the remainder of the year will be tough for the world's largest auto market.

"Auto sales have always been slow in the summer. But an extraordinary strong 2009 and worries about the economy are also to blame," he said in an interview with Reuters.

"We might see more traffic at showrooms by autumn, but it won't be anything close to the packed showrooms and explosive sales we saw in 2009."

Separate statistics published by the China Association of Automobile Manufacturers showed that 1.24 million vehicles were sold in the country during July.

This represents a 14.42 per cent rise from the equivalent period in 2009, but a decline of 11.9 per cent from the total for June.

According to the body, cars with engines of 1.6 litres and below accounted for 65.38 per cent of overall passenger vehicle sales - the fifth month in a row this figure has been lower than last year's average of 69.5 per cent.

Meanwhile, the US enjoyed its best month for auto sales since the 'Cash for Clunkers' incentive scheme in August 2009.

Figures from Autodata revealed that 1.05 million vehicles were sold in July, up by five per cent on a year-on-year basis, with a seasonally-adjusted annual sales rate of about 12 million units.

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