China vehicle sales hit monthly high of 1.15 mln

SHANGHAI — China’s vehicle sales jumped 25 percent in April from the year before to a record monthly high of 1.15 million units, according to industry figures released Friday.

Passenger car sales surged 37 percent over a year earlier to 831,000, outpacing U.S. sales in April of 820,000 units, according to figures from the China Association of Automobile Manufacturers.

After slowing late last year as the impact from the global financial crisis deepened, China’s auto sales have risen for five straight months. In March, vehicle sales hit a monthly record high of 1.11 million units.

A large share of sales in April were of small cars and crossover vehicles promoted by tax cuts and other policies favoring vehicles with engine displacement of 1.6 liters or less, the industry group said in the report on its Web site.

Such vehicles accounted for 691,000 of the total, it said.

China bypassed Japan to become the world’s second biggest market for new vehicles in 2006. With its 1.3 billion population, it was also bound to overtake the U.S., and the sharp downturn in American sales has accelerated that trend.

Vehicle sales in China rose 9.4 percent in January-April over the year before to 3.83 million. Sales in the U.S. totaled 3 million.

The main reason for China’s ascent to first rank is the sharp decline in U.S. sales amid the recession. If they rebound as the economy improves, the U.S. is likely to reclaim its leading status for at least some time.

“Within two years, the U.S. market may be back to 15 million units a year in sales, and China will still be No. 2,” said Yale Zhang, a Shanghai-based analyst at CSM Worldwide.

Current trends make it likely that China will meet its target for sales of 10 million vehicles in 2009, he says.

Others caution that the surge in sales seen early in the year is likely to wane in coming months once the boost from tax cuts and subsidies for small car purchases wears off.

“The high sales came from the stimulus policy, which has successfully increased purchases in the short term,” said Zhang Xin, an analyst at Guotai Junan Securities, in Beijing. “In my opinion, potential demand has been used up too fast. It will be hard to maintain stable growth in the next year.”

Associated Press researcher Ji Chen contributed to this report.