GM's China sales exceed U.S. for third straight month

General Motors Co.'s China sales rose to a record in March, surpassing its U.S. deliveries for a third straight month and cementing the country's importance as the world's largest auto market.

GM, the biggest foreign automaker in China, boosted sales 68 percent to 230,048 vehicles last month, it said in a statement today. That compares with a 33 percent gain for Japan's Toyota Motor Corp. and a 47 percent jump by South Korea's Hyundai Motor Co. GM raised U.S. sales 21 percent in March to 188,546.

Detroit-based GM aims to increase its China sales to 2 million vehicles this year from 1.83 million in 2009, when government subsidies helped boost the nation's auto demand 46 percent from a year earlier, surpassing the U.S. for the first time. Rising sales are spurring automakers to add production capacity in China, even as the growth rate may slow this year.

"There is continuous demand for cars in China," said Qin Xuwen, an analyst at Orient Securities Co. in Shanghai. "Sales won't be a concern, although carmakers may be forced to cut prices given rising capacity."

Toyota, the world's largest carmaker, said its China sales increased to 61,200 vehicles last month. Hyundai, the fastest- growing foreign automaker in China last year, sold 61,638 units.

Hua Foley, a Shanghai-based spokeswoman for GM, wasn't immediately available for comment.

'Price War'

China last year halved the sales tax on new vehicles to 5 percent and set aside 5 billion yuan ($733 million) in subsidies for customers who replace old models, helping insulate the country from slumping global demand. The government on Dec. 10 announced plans to scale back the measures, including raising the tax on new vehicles with engines of 1.6 liters or smaller to 7.5 percent.

Zhang Xin, an analyst at Guotai Junan Securities Co. in Beijing, forecasts industrywide vehicle sales growth will slow to 10 to 15 percent in China this year.

"A price war is on the horizon, as automakers face rising competition coupled with slower sales growth for small cars," Xin said.

GM's March figures include sales of 129,489 vehicles at its minivan-making venture SAIC-GM-Wuling Automotive Co., an increase of 43 percent. Sales at Shanghai General Motors Co., another unit, increased 89 percent to 86,967.