China Auto Sales Jump 27 Percent in November

December 9, 2010 - 8:56 AM

Shanghai (AP) - China's auto sales powered ahead in November, jumping 27 percent to 1.7 million vehicles as car buyers rushed to beat expected increases in license plate fees in some cities.

The rebound after a slowdown during the summer pushed sales for the year to 16.4 million vehicles, up 34 percent from the year before, the government-affiliated China Association of Automobile Manufacturers said in a notice Thursday on its website.

While American automakers celebrate signs of a long-awaited revival in U.S. car sales, China's strong growth suggests it will retain its status, acquired last year, as the world's biggest market by sales of new vehicles.

Sales of passenger cars surged 29 percent over a year earlier to 1.34 million, CAAM reported.

The expected expiration of subsidies for purchases of small, energy efficient cars next year, and rumors that some cities plan to counter growing traffic problems by raising license plate fees, prompted buyers to head for the showrooms, says Zhang Xin, an auto analyst at Guotai & Jun'an Securities, in Beijing.

"Consumers want to catch the last of the cheap car plates," Zhang said.

China's craze for the automobile has left the streets of many cities desperately congested, prompting some cities to consider Shanghai's example in raising license plate fees. While plates cost just a few hundred yuan (less than $100) in most places in China, the cost in Shanghai, where they are sold by auction, usually is $6,000 or more.

While car buyers can skirt the rules by registering vehicles outside cities with help from relatives in the countryside, cities sometimes impose restrictions on cars with out-of-town plates.

Despite the surge in car purchases in November, output of 1.75 million new vehicles exceeded sales, pushing inventories higher.

Demand is likely to slump in coming months since many buyers simply decided to move up purchases that otherwise would have been made next year, Zhang said.

"This is excess growth. It's not hard to imagine a slump in the industry next year and I'm deeply worried about how that might affect other industries, such as energy, steel and so on," he said.

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Associated Press researcher Ji Chen contributed to this report.