(November 28, 2010) Auto sales in China will grow more than 30 percent to 18 million units this year, predicts J.D. Power and Associates. But in 2011 and beyond, the U.S.-based research firm expects China's auto market will grow at a somewhat lower rate than in 2009 and 2010.

In October, China's light vehicle sales reached 1.5 million units. The month's seasonally adjusted annualized rate equaled 19.2 million units, the first time annualized sales have topped 19 million units.
By comparison, auto sales in the U.S. are predicted to be around 12 million units in 2010.

J.D. Power says Chinese consumers are rushing to buy vehicles before the central government's sales incentive expires.

In January 2009, the government cut its purchase tax for vehicles with engine sizes of 1.6 liters and below, from 10 percent to 5 percent. That triggered explosive auto sales growth. At the start of this year, China's central government partially restored the tax on small vehicles to 7.5 percent.

Now Beijing is widely expected to let its remaining tax incentive expire at the end of this year, in part because China's fast-growing vehicle fleet is damaging the environment and is rapidly increasing oil consumption.

For these reasons, J.D. Power does not believe the government will allow auto sales to grow as fast as they did in 2009 and 2010, when sales rose 50 percent and 30 percent, respectively.

John Zeng, J.D. Power's Asia forecasting director, predicts auto sales will grow 10.5 percent in 2011.

This forecast dovetails with the prediction of GM China President Kevin Wale. Last week, Wale told Bloomberg News that China's sales will grow 10 percent to 15 percent, depending on the extent of the sales tax increase.

Source: Automotive News