China February Auto Sales Rise 25% After Tax Cuts

March 10 -- China vehicle sales surged 25 percent in February, the first gain in four months, after the government cut taxes on some models, helping the country extend its lead as the world’s largest auto market this year.

Sales of passenger cars, buses and trucks climbed to 827,600, the China Association of Automobile Manufacturers said today in Beijing. The tally in the first two months rose 2.7 percent to 1.56 million, compared with a 39 percent decline to 1.35 million in the U.S.

China has halved retail taxes on small cars and drawn up plans to give out vehicle subsidies in rural areas to revive demand after auto sales rose at the slowest pace in a decade last year. Combined with the country’s wider 4 trillion yuan ($585 billion) economic stimulus package, the policies have caused General Motors Corp. to roughly double its forecast for China’s nationwide auto market growth this year.

“Consumers are regaining confidence because of the government’s stimulus policies,” said Ricon Xia, an analyst at Daiwa Research Institute in Shanghai. “Still, vehicle sales may fluctuate in the coming months.”

Sales this month will likely be better than in February, Xiong Chuanlin, vice secretary-general of the automakers group, told reporters in Beijing today. The body is “cautiously optimistic” about full-year sales, he added.

Snow, New Year

The February sales jump, the biggest in 18 months, was also helped by an earlier Lunar New Year holiday. The weeklong break was in January this year compared with February last year. Snowstorms across much of China also disrupted the market in 2008.

Passenger-car sales, including sport-utility and multipurpose vehicles, rose 24 percent last month to 607,300, the association said. In the first two months, the tally climbed 5.8 percent to 1.22 million.

Sales of cars with engines or 1.6 liters or less jumped 19 percent in the first two months. Their market share gained by 7.71 percentage points.

Rising sales and production cuts by automakers has caused the nation’s stockpile of unsold vehicles to fall to the lowest in two years last month, the grouping said.

Commercial-vehicle sales fell 6.9 percent in first two months as the sector received less government support than passenger cars, the group said. Truckmakers are now seeking similar stimulus plans, it added.

GM Forecast

GM, the biggest overseas automaker in China, raised its forecast for the nation’s market growth this year to a range of between 5 percent and 10 percent from an earlier prediction of less than 3 percent, GM Asia-Pacific President Nick Reilly, said last week.

India, the world’s second-most populous nation, also had an increase in February auto sales, the first gain in five months, as emerging markets avoid the world of the global recession.

By contrast, GM is shuttering plants in the U.S. and seeking a government bailout on tumbling demand. GM’s domestic sales collapsed 51 percent in the first two months as the industrywide sales rate dropped to the lowest level since 1981 amid the recession.

In China, the government halved sales taxes on cars with engines of 1.6 liters or less starting from Jan. 20. It’s also providing 5 billion yuan in subsidies to spur auto sales in rural areas. That has particularly benefited GM’s SAIC-GM-Wuling Automobile Co. venture, the largest minivan-maker in China, Reilly said. The carmaker expects its own China sales growth to outperform the market by as much as 3 percentage points this year, he added.

Volkswagen AG, the second biggest automaker in China, said last month that it plans to double local sales by adding at least four new models a year until 2018. The carmaker sold 1.02 million vehicles in China last year.

(Bloomberg)

Peugeot 2008 Sales Drop on Slumps in Europe, China

Jan. 13 -- PSA Peugeot Citroen, Europe’s second- biggest carmaker, said vehicle sales fell 8.7 percent last year, exceeding a company forecast as the economies of its home region and China soured.

The carmaker sold 2.95 million cars and light trucks in 2008 compared with 3.23 million a year earlier, it said in a statement today. The decline outpaced the 3.5 percent contraction the Paris-based company forecast in October.

European carmakers have shuttered plants and suspended thousands of jobs to reverse a buildup of unsold vehicles as plummeting consumer confidence and tighter credit erode sales. Renault SA, Peugeot’s smaller domestic rival, said Jan. 6 it had reduced inventories to 70,000 vehicles from more than 100,000 in September after slashing production by 50 percent in the fourth quarter.

“Peugeot Citroen resisted the sharp downturn in auto markets, maintaining its global market share at 5 percent,” the company said. Western European sales fell 11 percent to 2.08 million vehicles and its market share was unchanged, Peugeot said. Deliveries in central and eastern Europe dropped 6.1 percent, while jumping 59 percent in Russia.

Vehicle sales in China plunged 14 percent, contracting 3 percent in the second half after a 13 percent gain in the first. South American sales slipped 1.2 percent, the company said.

Including vehicles sold as unassembled kits, global sales dropped 4.9 percent to 3.26 million, Peugeot said.

(Bloomberg)

GM supplier Delphi suspends work at China factory

SHANGHAI, China — U.S. car parts maker Delphi Corp. has suspended work at a factory in Suzhou due to shrinking demand amid the global economic slump, a media report and a staff member said Monday.

The factory west of Shanghai in the city of Suzhou makes compressors for General Motors Corp. Calls to the plant rang unanswered Monday.

"The sudden and unprecedented decline in (car) sales globally has resulted in our only customer, General Motors North America, announcing plant closures and plant stoppages," the Hong Kong newspaper South China Morning Post quoted a Delphi internal document as saying.

"Unfortunately our only customer in 2009 is GMNA, and this has placed the Suzhou compressor plant in a very dangerous position," it said.

A staffer on duty at Delphi's Shanghai office, which was closed this week for the New Year holiday, confirmed that the facility had temporarily suspended work due to the slowdown in demand as GM cuts back on output.

The staffer gave only his surname, Zhao, as is common with many media-shy Chinese.

Troy, Michigan-based Delphi is a former subsidiary of General Motors that filed for protection from bankruptcy in October 2005. It has more than $500 million in mainland Chinese assets, the Post report said.

China's own once-booming auto market is seeing sales fall from double-digit growth rates as demand cools.

(AP)

SAIC seeking Korea support for Ssangyong

SHANGHAI, Dec 29 - China's SAIC Motor Corp and Ssangyong Motor are seeking support for the troubled South Korean auto maker from the Korean government and banks, the Chinese company said on Monday.

SAIC, which owns 51 percent of Ssangyong, also said the two companies were discussing with union representatives how to cut the Korean firm's labour costs.

"At present SAIC and Ssangyong are actively seeking support from the Korean government and banks," SAIC said in a brief statement.

It did not elaborate on the nature of any support, and did not say whether SAIC itself might provide fresh financial assistance to Ssangyong.

Last week, an official at state-owned Korea Development Bank (KDB) said the bank had urged SAIC to provide Ssangyong with 120 billion won ($93 million) in cash in return for the transfer of technology. KDB also called on SAIC to guarantee a combined 200 billion won worth of loans from two Chinese banks to Ssangyong. The KDB official said his bank would be willing to consider extending new loans to Ssangyong, but only if SAIC first granted assistance to the Korean company.

Ssangyong, which makes the Rexton and Kyron sport utility vehicles and ranks fifth among South Korea's automakers, said in mid-December that it was halting production until the end of this month because of slumping auto sales.

In November it sold 3,835 vehicles, down 63 percent from a year earlier, while monthly sales by all South Korean auto makers fell 8.6 percent.

The Korea Economic Daily on Monday quoted a KDB official as saying Ssangyong might be liquidated unless SAIC injected money and the Korean company cut its workforce and announced new car plans.

(Reuters)