BEIJING - Light-vehicle sales in China in the first half of 2005 suggest a return to strong growth, rising 10.6 percent to 1.84 million units, according to the China Association of Automobile Manufacturers.
After several years of 50 percent-plus annual growth, the Chinese government cooled consumer demand when it slowed bank lending beginning in April 2004. Price wars also cut sales, as shoppers held out for lower prices. China's passenger car sales growth plummeted in the second half of last year.
"Last year, the price was unstable. This year, people are more confident, and they really come out to buy," says Yale Zhang, head of market forecaster CSM Asia's Shanghai office. He predicts the market will grow by 20 percent this year, twice the rate most analysts and automakers are forecasting.
General Motors China sales grew 18.9 percent in the first six months to 308,722 units, including commercial vehicles, according to GM.
Inexpensive small vans and cars accounted for more than half of GM's sales. Sales at Shanghai General Motors, which assembles Buick and Chevrolet sedans, vans and compacts, fell by 4.2 percent in the same period.
"SGM sales got off to a relatively slow start when it discontinued production of the Buick Sail (subcompact)," says Kevin Wale, president of the GM China Group. "For the year as a whole, Shanghai GM is on track to once again achieve double-digit growth."
Cars costing less than 150,000 yuan, or $18,138 at current exchange rates, were hot in the first half of the year.
For example, sales of Honda Motor Co.'s $12,000 Fit subcompact assembled at the Guangzhou Honda joint venture jumped 59.2 percent to 43,613 units in the first six months of this year. Sales were aided by the addition of a hatchback version. Honda's total China sales rose 41.4 percent to 117,641 units.
GM's Chevrolet Aveo compact, which goes on sale in a few weeks in China, falls into the same economy car category. That launch, plus new versions of the Buick Regal sedan and GL8 executive van, should boost GM's China sales for the rest of the year, says Ashvin Chotai, director of Asian automotive industry research at Global Insight in London.
Chotai also forecasts healthy sales for the Chevrolet Spark, a $6,500 small car.
Ford sold 33,621 vehicles in China in the first half of the year, an increase of 22.0 percent. Ford says the growth was driven by sales of the imported Maverick SUV, a rebadged Ford Escape.