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China auto sales may expand at slowest pace

CHINA vehicle sales may climb about 5 percent this year, the slowest pace since 1998, as a cooling economy and rising job insecurity damp demand, the China Association of Automobile Manufacturers said yesterday.

China's vehicle sales grew at the slowest pace for at least three years at 6.7 percent to 9.38 million units last year, the association said.

Despite falling short of a target of 10 million units, the nation remained one of the best-performing markets in the world last year when a global financial crisis weakened demand for new vehicles and left car makers struggling with a sales slump and a lack of capital.

Domestic car makers sold a combined 6.76 million passenger sedans, including cars, sport-utility vehicles and multi-purpose vehicles in 2008, a 7.3-percent growth from a year earlier. The growth for 2007 was 15 percent.

Sales of commercial vehicles gained 5.25 percent to 2.62 million units during the same period.

The December sales for the total market tumbled 12 percent compared to last year to 741,600 while passenger car sales posted its first year-on-year decline over the past nine years at 8 percent after falling in four of the past five months.

Analysts said the cooling vehicle market has spurred concerns about the national economy and accelerated an industrial revival plan that would be possibly released this week.

"We are closely looking at the revitalizing plan as the industry turn-around would weigh heavily on supportive government policies," said Tan Jijia, an analyst at Pacific Securities Co.

The central government has nearly finalized a revival plan to spur vehicle demand which would include scrapping a vehicle purchase tax on vehicles with small engines, favorable car loans and subsidies for car owners who scrapped vehicles years before the end of the car's life cycle.

The revival plan aims to maintain an average 12-percent sales growth for the auto industry within three years, according to media reports.

General Motors Corp expects its sales in China to surpass its North American sales by 2013 or 2014, Nick Reilly, the company's Asia chief, said yesterday at the North American International Auto Show in Detroit. United States-based Ford Motor Corp yesterday said it sold 306,306 vehicles in China last year.


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