In spite of the unfolding global credit crisis and soaring energy prices, auto sales in China maintained double-digit growth since the beginning of the year. Passenger car sales rose 17.84% year-on-year in the first four months of 2008.

According to the China Association of Automobile Manufacturers (CAAM), sales reached 2.46 million cars, including 1.81 million sedans, 75,500 mini-vans and 141,300 sport-utility vehicles. And the figure for March was unusually large, showing the most rapid year-on-year growth in seven months.

Volkswagen AG’s two Chinese ventures — FAW Volkswagen and Shanghai Volkswagen — continued to top the sales list last month, as well as in the first four months. They are followed by the Detroit-based car maker’s venture with Shanghai Automotive Industry Corp, Shanghai GM. And domestic auto producers sold 463,100 sedans in the first four months, accounting for a 25.46% share of the total sedan sales.

China, the world’s second-largest car market, produced 8.88 million automobiles last year, of which 8.79 million were sold. And this year, auto sales are anticipated to exceed 10 million units, which stand for a 14% full-year sales growth.

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The head of Volkswagen, Winfried Vahland, said at the Beijing Auto Show that shrinking margins have “put great pressure on the profitability and even the survival of automakers in China.” The challenges, like slowing sales, tumbling prices, eroding profits and choosy customers, will face all cat-making competitors at least the next three years.

According to Bloomberg reports, car prices in China fell by one-third between 2000 and 2007. At the same time, prices for raw materials, fuel and power increased by 36 percent.

One of the problems shared by such European and US car makers as Volkswagen and GM in China is that they are less competitive in small models of cars, though they have strong brands. However, domestic auto makers have great difficulties in establishing their brands, whose strategy is basically to follow the international supplies and to subcontract from them.

Still, Vahland estimates that China will surpass the United States as the biggest car maker by 2015.

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