Passenger car sales rise but slowdown expected

CHINA'S passenger car sales accelerated 20.4 percent to 5.99 million units last year, according to the China Passenger Car Association, but an industry expert cautions that sales may slow.

The brisk sales included 4.45 million cars, a growth 20.4 percent year on year, 216,594 multi-purpose vehicles as well as 989,480 mini vans, the semi-official auto association said yesterday.

Sport utility vehicles enjoyed the fastest growth of 49 percent to total 341,798 units. Great Wall Motor Co, the nation's largest SUV maker, more than doubled sales of Hover model to 51,485 units.

The China Association of Automobile Manufacturers is due to release official statistics next week.

The passenger car segment, the main driver of China's overall vehicle sales, kept its rapid expansion over the past one-and-a-half years. But the growth began to slow compared with a 25.4-percent increase for 2006 from 2005 as the domestic auto market matures.

Dong Yang, vice chairman of CAAM, said on Tuesday that auto sales in China will likely grow at double-digit rates to hit a record 10 million units this year after posting a sales milestone of more than 8.7 million units last year.

In 2006, China overtook Japan to become the world's second largest auto market, only next to the United States with sales of 7.2 million units, up 25.13 percent from a year earlier.

Rao Da, secretary general of the passenger car association, however, cautioned against the rosy outlook.

"The introduction of a possible fuel tax as well as soaring oil prices worldwide will dramatically influence auto sales," he said.

Most of the car makers from home and abroad benefited from the sizzling car sales last year as China's economic boom raised people's income.

General Motors Corp, the biggest overseas car maker in China, sold over one million vehicles last year, a jump of an estimated 15 percent from 2006.

"We do expect sales to grow at double digits (this year) but we have seen some slowdown in the rate of growth in the last quarter as the government tightened credit," said Kevin E Wale, managing director of GM China, earlier.