Bigger price discounts and eased restrictions on Beijing traffic created a rise in China's passenger car sales in October, reversing a two-month decline.

Sales of sedans, sport utility vehicles and multi-purpose vehicles rose 8.36 percent to 538,500 units in October from a year earlier, the China Association of Automobile Manufacturers said yesterday.

"The growth was driven by the combined impact of eased traffic limits in Beijing after the Olympics as well as massive price reductions offered by car makers to move inventory," said Lang Xuehong, director of the auto division of consulting firm Sinotrust.

"It's a good signal to help rebuild confidence among both car makers and consumers," she said, "But there's still not enough evidence to show the auto industry is on track to rebound."

Car sales, which had recorded annual growth of more than 20 percent in previous years, have posted year-on-year declines over the past two months as the slumping stock market and slowing economy prompted consumers to tighten their belts.

Full-year car sales are forecast to fall by 10 percent, prompting car makers to reduce output and cut jobs to deal with easing demand and possible overcapacity.

The Chinese government is considering incentives, including favorable consumption taxes and subsidizing manufacturers for developing new energy vehicles, to help auto makers boost sales and minimize the impact of the global financial crunch, Bloomberg News reported.

The 4-trillion-yuan (US$586 billion) stimulus package announced by the State Council on Sunday also put transportation, the environment and technology innovation among its 12 top priorities.

"As the driving force of China's economic growth, the auto industry has a close relationship with the macro-economy and will benefit from the series of incentives," said Sinotrust's Lang.

In the first 10 months this year, passenger car sales rose 11.07 percent to 5.64 million units from a year earlier while commercial vehicles posted an 11.22-percent increase to 2.3 million units.

CAAM said demand for commercial vehicles fell sharply in October as the slowing economy delayed investment in infrastructure and real estate.

Total auto sales in China during January to October climbed 11.11 percent year on year to 7.94 million units.

SAIC Motor Corp Ltd, the nation's biggest car maker, sold 1.44 million units for the first 10 months, followed by 1.32 million units for FAW Group Corp and 1.2 million units for Dongfeng Motor Co Ltd.

Among the top 10 best-sellers, SAIC-GM-Wuling Automobile Co, General Motors' commercial vehicle venture, took first place with 485,499 units, while two ventures of Volkswagen AG took second and third position.

(Shanghai Daily November 11, 2008)