Chinese auto sales forecast to grow at slower pace

BEIJING¡ªAuto sales rose 32% in China last year but will likely slow to 10% to 15% as purchase incentives are withdrawn.

That would extend a slowdown from 2009, when 46% growth pushed the China past the U.S. to become the world's largest auto market.

The China Association of Automobile Manufacturers said changes in government incentives and Beijing's announcement of measures to curtail car congestion could affect auto sales for this quarter or longer.

China's vehicle sales grew strongly last year, to 18.06 million units, because of incentives and concerns among consumers that the policies wouldn't be extended into this year, Zhu Yiping, deputy secretary general of the association, said at a news conference Monday. Chinese sales of passenger vehicles rose 33% to 13.76 million units last year.

In December, China's total auto sales rose 18% from a year earlier to 1.67 million vehicles, while sales of passenger vehicles rose 19% to 1.3 million units.

Separately, Nissan Motor Co. said its sales in the country rose 36% last year to 1.02 million vehicles, surpassing the 908,570 sold in the U.S. to become the Japanese auto maker's largest market. Nissan said demand was led by its Teana sedans. The company forecast that its China sales would rise 13% this year to 1.15 million vehicles.

China's auto market won't develop excessive production capacity this year, auto-association Secretary General Dong Yang said, adding that capacity last year was inadequate.

He said China's auto exports are likely to increase this year, but didn't say by how much. China's auto exports rose 64% last year to 544,900 units, the association said.

Domestic brands accounted for 46% of passenger-vehicle sales in China last year, up from 44% in 2009, Ms. Zhu said.

Passenger vehicles with engines of 1.6 liters or smaller accounted for 69% of last year's passenger-vehicle sales, boosted by incentives, she said. The Finance Ministry said last month that the purchase tax on cars with such engines would return to 10% on Jan. 1, ending an incentive under which the tax was 7.5%.

And to combat congestion, Beijing's city government has said it will issue a maximum of 240,000 license plates for new cars and microvans this year, after issuing an estimated 750,000 plates last year. The city said it will restrict new licenses to registered Beijing residents and that cars without Beijing plates will be barred from entering the main city area during rush hour. Other major cities are expected to follow Beijing's lead.

Mr. Dong said he expects China to announce policies to boost the market for energy-saving vehicles and vehicles using alternative-energy sources. China's Finance Ministry last month said it would extend subsidies for such vehicles into this year but didn't give details.