China’s 2009 auto sales forecast to hit 12.6M units image

China’s auto sales should soar to 12.6 million units this year, up 35 percent from 2008, boosted by subsidies that the industry is lobbying Beijing to extend, a government researcher said Friday.

China’s auto sales have surpassed those of the limping U.S. market for all but two months so far this year, helped by cuts in sales tax and subsidies for more fuel-efficient vehicles.

In September, Chinese sales are likely to total 1.25 million units, said Xu Changming, senior economist for the Cabinet’s State Information Center. He was speaking at a seminar organized by industry newsletters China Business Update and China Auto Review.

Automakers are lobbying Beijing to extend tax cuts and subsidies that are due to expire at the end of this year, Xu said. He said the government is to announce a decision in mid-December.

“If the policy is extended to next year, rapid growth of auto sales will be sustained,” Xu said. “Otherwise, it will fluctuate, and it’s hard to predict the degree.”

Passenger car sales are projected to reach 7.9 million units this year, up 38.7 percent compared with 2008, according to Xu.

The government cut sales taxes this year on automobiles with engines smaller than 1.6 liters and is paying subsidies for rural sales as part of efforts to revitalize the industry.

Global automakers are looking to China to drive revenues amid sluggish demand elsewhere.

As of August, China led the world in vehicle sales for 2009, with 8.33 million units sold, compared with 7.1 million units for the United States.

U.S. monthly sales got a temporary boost to 1.3 million units in August from Washington’s “Cash for Clunkers” subsidies for trading in older cars. But industry analysts say that surge could quickly subside after subsidies end.

Xu said he was not worried that Chinese auto production might exceed demand even if subsidies stop because sales are likely to grow by at least 15 percent a year over the next decade.

Source: AF via Gasgoo