Strong demand drives rising car sales in China

BEIJING -- Chinese demand for autos in the first quarter of 2008 showed resilience, with sales up sharply for big auto makers despite the country's slumping stock market and rising inflation.

About 2.58 million vehicles were sold in China from January through March, up 21% from a year earlier, according to data from the China Association of Automobile Manufacturers.

Strong Chinese demand pushed sales to record levels for auto companies, offsetting some of the problems they are facing in the U.S. as an economic slowdown eats into their business.

Honda Motor Corp.'s sales in China grew 29% to 112,438 vehicles for the quarter, during which the Japanese auto maker's unit sales in the U.S. declined 0.4%. More dramatically, Honda's March sales were up 72% in China to 52,862 vehicles, while its U.S. sales slipped 3.2% from a year earlier.

In China, Honda was helped by the recent global release of a new generation of the Accord, said CSM Worldwide auto analyst Yale Zhang. "That car really fits the Chinese perception of a business car," he said.

In the U.S., however, first-quarter sales of the sedan fell 0.8% from the same period of 2007.

Ford Motor Co. also had first-quarter gains in China that exceeded those of the sector, with a 54% increase in passenger vehicles sold, to 47,213. Total first-quarter vehicle sales in China for Ford were 90,791, a 47% increase from a year earlier and a record for the U.S. company.

Volkswagen AG likewise set a company record, selling 103,200 vehicles in China in March. It is the first time the company has sold more than 100,000 units in a month in China, it said.

The German auto maker's first-quarter China sales, including those in Hong Kong and Macau, rose 32.5% to 268,200 vehicles.

BMW AG posted a 43.2% growth in the first three months from the same period last year, selling 14,574 BMW and Mini vehicles in the mainland.

Not all auto manufacturers managed double-digit growth.

While General Motors Corp. sold a record 311,512 vehicles for the quarter in China, sales grew just 6.8% from 291,588 in the first three months of 2007. It had increased 25% in the first three months last year.

GM's most popular offering in China, the Buick Excelle, might be losing its luster, analyst said. The model is now nearly five years old in a segment crowded with options: It competes with Toyota Motor Co.'s Corolla, Volkswagen's Sagitar and Jetta, Hyundai Corp.'s Elantra, Ford's Focus and a slew of Chinese brands.