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April vehicle sales up 25% as government incentives kick in

CHINA'S vehicle sales rose to a new monthly record in April as government incentives continued to boost the sales of small cars, and there was also a higher demand for vehicles with large engines.

Vehicle sales including cars and trucks rose 25 percent year on year to 1.15 million units last month, according to the China Association of Automobile Manufacturers. The growth outpaced the 5 percent increase in March and is also higher than the 3.88 percent rise for the whole of the first quarter.

The robust April figures mean China's vehicle sales have been increasing for four consecutive months.

"We see a clear recovery in China's auto industry from April's sales," said Zhu Yiping, an official from the association.

Passenger car sales jumped 37 percent to 831,000 units in April, driven by a 56 percent surge in cars with engine capacities of 1.6 liters or below after the government halved purchasing tax on small cars and handed out 5 billion yuan (US$733 million) in subsidies to spur demand in rural areas.

Sales of mid-priced and luxury sedans, which do not qualify for government stimulus measures, also picked up in April. Sales of cars with engine capacities between 1.6 liters and 2.0 liters rose 2.2 percent from March and the growth for 2.0 liter to 2.5 liter vehicles grew 5.2 percent.

"The government measures have greatly heightened consumer enthusiasm and made the auto industry the first sector of China's overall economic revival," said Rao Da, general secretary of the China Passenger Car Association.

The April sales hike is likely to help China extend its lead against the United States as the world's biggest auto market for new car sales.

Vehicle sales for the first four months of 2009 in China expanded by 9.4 percent from a year earlier to 3.83 million units. This compared to sales of 3 million units in the US during the same period, and a 34.4 percent fall in year-on-year April sales.

Industrial analysts expressed optimism that China's auto industry was back on track, perhaps signaling a revival in the global auto industry.

However, CAAM also remained cautions about many difficulties that the industry is facing, including falling profits among car makers and weak overseas demand.

The combined revenue of 19 key auto groups, which generate 50 percent of the industry's revenue, declined 14.15 percent to 268.6 billion yuan in the first quarter, while profits were down 48 percent to 10.8 billion yuan.

Sales of commercial vehicles edged up 1.38 percent to 322,100 units in April, according to CAAM.


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