China auto sales surpass US for 3rd month

Preliminary figures show auto sales in China reached about 1.03 million in March, exceeding U.S. sales for the third month in a row, state media reports said Wednesday.

Sales data from 14 major auto makers, accounting for roughly 90 percent of total sales, totaled 1.026 million, the Shanghai Securities News and other state-run newspapers said, citing Chen Bin, head of the Department of Industry at China's main economic planning agency.

Full industry data due to be released by the China Association of Automobile Manufacturers in coming days could push March auto sales in China, the world's second-largest auto market, to a monthly record, the report said.

China's industrywide auto sales in March 2008 totaled 1.06 million, it said.

Americans bought 857,735 new vehicles in March, down 37 percent from the 1.36 million sold in the same month a year earlier, according to Autodata Corp.

But a 25 percent jump in U.S. sales from February raised hopes that the worst may be over for an industry battered by global economic malaise and financial catastrophe.

China is bound to eventually overtake the U.S. as the world's largest auto market, and the recent developments have accelerated that trend, with Chinese vehicle sales in January and February exceeding U.S. monthly sales for the first time ever.

China's first-quarter sales may exceed those in the U.S., Chen told a shipbuilding conference in Beijing. Sales for the full year are forecast to exceed 10 million units for the first time ever.

With sales slumping elsewhere, China is one of the few bright spots for the ailing industry. But its promise is also a curse for automakers facing ever intensifying competition among both domestic and foreign manufacturers.

Stuttgart, Germany-based Daimler AG on Wednesday was launching its Smart model in China - the 39th market for the two-seater hybrid minivehicle. Other automakers are also planning launches ahead of and during the April 20-28 Shanghai Auto Show.

The focus is mainly on smaller and more fuel-efficient vehicles likely to appeal to frugal families, rather than the roomy, gas-guzzling sedans of the past.

"Sales may be surpassing the U.S., but at the same time profits are being squeezed due to the lower prices of the smaller cars," said Zhang Xin, an analyst at Guotai Junan Securities, in Beijing.

Automakers and shipbuilders are among 10 strategically vital industries singled out by Beijing for special support this year as China battles a slump in demand for its exports.

To help spur auto sales, the government halved taxes on purchases of small autos and is spending 5 billion yuan (about $730 million) on subsidies for purchases of light trucks and minivans in the countryside, where most of its 1.3 billion people live.

Partly as a result of those policies, China's vehicle sales rose 25 percent in February from a year earlier.

But Zhang, the analyst, cautioned against reading too much into volatile monthly figures.

"It doesn't really make sense to compare our industry with the U.S. industry. We are not at the same level at all and there is no reason for arrogance," Zhang said. "With competition growing, the question is how to become stronger," he said.

(AP)