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China car sales jump 'beyond imagination'

(Agencies)
Updated: 2009-06-11 14:22

Zhao Hang, who helped devise China’s auto-stimulus package, is facing demand from car buyers battling an unexpected consequence - two-month waiting lists.

"Eight friends have asked me to make calls or write notes to contacts to help speed purchases," Zhao, president of the China Automotive Technology & Research Center said in an interview. "Given the world economic situation, demand for cars is surprisingly strong in China."

Beijing drivers, used to leaving showrooms with new cars the same day, now have to wait about three weeks for a Hyundai Motor Co. Yuedong Elantra, China's bestselling car, or as long as eight weeks for a Honda Motor Co. CR-V sport utility vehicle. Carmakers failed to predict a 14 percent sales jump caused by an economic rebound, tax cuts and subsidies and are now trying to raise Chinese output even as they cut US and European production on plunging sales.

The interior of a Honda Motor Co. CR-V sport utility vehicle is displayed at the Shanghai International Auto Show in Shanghai, China April 28, 2009. [CFP]

"We are having headaches and shortages because the automaker can't make enough Yuedongs," said Li Minghui, a salesman at dealership Beijing Hyundai Boshishan. "We expected sales to pick up at the beginning of this year, but it's beyond our imagination that it would be this good."

The China Association of Automobile Manufacturers in January forecast a 5 percent increase in 2009 auto sales after demand declined in four of the last five months of 2008 amid the global recession. That would have been the slowest pace in 11 years. General Motors Corp, the largest overseas automaker in China, made a similar prediction.

Sales Surge

Special coverage:  Global Auto Industry Woes Related readings:  Senators concerned by US car dealership closures  GM to cut 14 plants by 2012, reaffirming to build small car in US  British incentive program hopes to spur new car sales  Hybrid car owners seek subsidies  Ford China venture car sales up 33% in April

Instead, auto sales have surged after the government offered subsidies to drivers in rural areas and cut retail taxes as part of a wider 4 trillion yuan ($585 billion) economic stimulus plan. The demand jump has caused GM to double its 2009 industrywide growth forecast. Combined with a 37 percent slump in US auto sales because of the recession, the surge has made China the world’s largest auto market so far this year.

"Customers have to book in advance because there's not enough stock of the bestselling cars," said Guo Yong, information manager at Beijing Asia Games Village Automobile Exchange, which houses dealerships accounting for about 10 percent of Chinese car sales. "Fourth-quarter sales weren’t that good last year and most carmakers curbed production as they were pessimistic about sales this year."

Industrywide production trailed domestic and exports sales by about 300,000 vehicles in the six months ended May, according to the China Passenger Car Association. That's helped push new vehicle stockpiles to near two-year lows.

Production Increases

To increase supplies of Yuedongs and other models, Beijing Hyundai Motor Co., Hyundai Motor Co.'s main China venture, ran plants at near-full capacity last month. Inventories had dropped to 80 percent of monthly sales, said President Noh Jae-man. Volkswagen has also added 50,000 vehicles to its 2009 production plan because of the demand jump.

"The development of the passenger-car market in the first quarter exceeded our expectations," said Winfried Vahland, Volkswagen’s China head.

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