China became the largest auto market
According to analysts and forecasts, China may become the world’s largest auto market since its monthly sales in January has surpassed the United States’, which reached about 790,000 vehicles.
Even car sales in China have slowed recently, but they seem to have better situation than the US, where January sales decreased 37%—a 26-year low.
It is the first time that China monthly sales have surpassed USA, said Mike DiGiovanni, General Motors’ executive director of global markets and industry analysis. He plans to make Chinese yearly sales hit 10.7 million, almost a million units more than his estimate in the US for the same period.
Although the figures of official Chinese car sales have not been published, analysts say the GM estimate is close to the real ones.
Chinese auto market professors make sure that China will be the strong, largest and most potential country in the market, although it is early to make this conclusion only based on monthly figure.
China became the world’s No. 2 auto market in 2006. Analysts say China has significant growth potential in the future, because of the government policies and the strong domestic demand. The government passed a stimulus package for the auto market, cutting the purchase tax on cars with engine capacity of less than 1.6 liters by half to 5%.
The government also spends 5 billion yuan on subsidies to farmers to realize small, 1.3-liter or less vehicles replacing three-wheeled vehicles or outdated small trucks.
This move is to enhance more energy efficient vehicles while improving the competitiveness of country’s car market. Upgrading automakers technology and developing alternative energy vehicles will cost about 10 billion yuan.
The most effective way to recover the car market is the purchase tax cut. And one auto analyst said the tax adjustment is expected to improve auto sales by 3-6 percent in China.
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