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Tuesday 08th of December 2009
December 7, 2009    

Surge in Chinese car sales and production

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by Kay Murchie

Chinese state media has reported that annual car sales and production in China has accelerated and topped the 12 million mark to the end of November.

In addition, the Xinhua News Agency reported that the China Association of Automobile Manufacturers expects car sales and production to exceed 13 million units for the full year.

China has never produced more than 10 million cars in one year before. Only the US and Japan (the world’s number one and two economies) have produced 10 million cars in a single year.

However, this could be set to change as China’s car industry has expanded rapidly over the last few years and in January 2009, it became the world’s largest car market when sales outperformed the US for the first time.

Carmakers in China are struggling to keep up with growing demand after state incentives, which include tax cuts on cars with engines smaller than 1.6 litres, resulted in a hike in sales.

China’s biggest carmaker, Shanghai Automotive Industry, sold 2.44 million cars in the 12 months to 30 November - an increase of more than 50% compared with the same period a year ago, according to Xinhua.

Like many other Governments across the globe, China has implemented a scheme which allows consumers to trade in their old car.

The schemes have been extremely successful and resulted in strong sales in many major economies.

The car scrappage scheme in the UK proved so successful that the Government recently announced an extension of the scheme.

In the meantime, in a bid to boost China’s economy, the Government embarked on a massive stimulus package of infrastructure projects to create jobs.

Official figures recently showed that Chinese GDP growth surged to 8.9% in the July to September period, up from 7.9% in the April to June period.

The strong result was due to all sectors performing strongly and was the fastest GDP growth since quarter three last year.

Many analysts have described China’s recovery as “impressive”.

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