Car sales drive to monthly high

Shanghai Daily, February 12, 2011

Sales of domestic car makers raced to their highest monthly level in January despite the expiry of government incentives on purchases and the introduction of vehicle license quotas in Beijing to ease the city's chronic traffic problems.

Ford Motor China yesterday said it sold a record 53,340 units in January, an increase of 20 percent from a year earlier.

Luxury car maker Mercedes-Benz sold 15,330 units in China last month, a surge of 89 percent from the same month a year ago.

Japanese rival Honda Motor Corp yesterday also reported sales more than doubled to 65,580 units in January from the same month last year.

The brisk sales occurred after the government ended incentives on smaller, fuel-efficient vehicles from January 1, which included tax cuts and subsidies. Beijing's city government limits vehicle registrations to combat congestion.

Analysts said the robust January sales were an extension of last year's market boom. Policy changes have prompted consumers to flock to showrooms and place their orders at the end of last year.

"The market doesn't show a significant slump amid the negative impact," said Fang Quan'an from Western Securities. "Growth in 2011 will be more steady."

However, the small car market started to show signs of cooling after the incentives were removed.

Ford said about 7,135 units of Fiesta compact cars were sold in January, an only 1 percent rise from a year earlier.