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China's auto sales surpass US for 3rd month

(Agencies)
Updated: 2009-04-08 20:50

But China's promise is also a curse for automakers facing ever intensifying competition among both domestic and foreign manufacturers.

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

Related readings:  China may top US in Q1 auto sales  Auto parts biggies to skip Shanghai expo  Detailed auto stimulus plan released  Obama asserts gov't control over the auto industry

"The confidence in China is back," said Klaus Maier, president and CEO of Daimler's Mercedes-Benz (China) Ltd.

While he said Mercedes expects double digit growth in China's luxury car segment, the industry focus now is mainly on smaller and more fuel-efficient vehicles likely to appeal to frugal families, rather than big sedans.

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

Those policies, part of a plan to boost 10 strategically vital industries singled out for special support, helped push China's vehicle sales up 25 percent in February from a year earlier.

But Zhang Xin, an analyst at Guotai Junan Securities, in Beijing, cautioned against reading too much into volatile monthly figures.

"Sales may be surpassing the US, but at the same time profits are being squeezed due to the lower prices of the smaller cars," Zhang said.

"It doesn't really make sense to compare our industry with the US industry. We are not at the same level at all and there is no reason for arrogance."

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