China Auto Sales Growth Slows but GM Outpaces Market

SHANGHAI (TheStreet) -- Auto sales in China rose 4.5% in March, not enough to match historic growth rates or to prevent a first-quarter sales decline of 1.3%.

The slowing pace of auto sales in China is one more indication that growth in the country is slowing, even as U.S. March auto sales were the best in four years. The decline reflects a variety of factors including slowing home sales, rising fuel prices and restrictions on auto purchases in cities with congested roads.
Growth in China may be slowing, but GM and Ford reported double-digit sales gains there in February.

Over the past decade, China's auto sales growth has increased at a double-digit pace, enabling the country to pass the U.S. as the world's largest auto market. But the China Association of Automobile Manufacturers said that March sales of passenger cars, including utility vehicles and minivans, totaled 1.4 million, while first-quarter sales totaled 3.8 million.

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U.S. automakers, which operate in China through joint ventures, have been exceeding average growth in China. GM ( GM), the market leader in China, said last week that it set March and quarterly sales records. Its March sales rose 10.7% to 257,944 vehicles and first-quarter sales rose 8.7% to 745,152 vehicles, its best quarter ever in China.

"GM has maintained our growth in our largest market in 2012, despite an overall industry slowdown," said Kevin Wale, president of GM China, in a prepared statement. "Our new models such as the Chevrolet Malibu have gotten off to a solid start, complementing the ongoing strength of established products such as the Buick Excelle, Chevrolet Cruze and Cadillac SRX."

Buick China sales exceeded Buick U.S. sales. In March, Buick China sales rose 3.7% to 57,082 units, as Excelle sales rose 25.4% to 24,134 units. For the full year 2011, Buick China sales totaled 645,537, while Buick U.S. sales totaled 177,633.

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Ford ( F) said last week that it will spend $600 million to expand its manufacturing capacity at its Chongqing plant by 350,000 passenger vehicles, raising total capacity in China to 950,000 vehicles annually. Ford has not reported March sales in China.

"With a current growth rate of about 5%, the Chinese auto industry remains the biggest growth market in the world," said Dave Schoch, CEO of Ford China, in a prepared statement. "Expanding our production capacity in Chongqing is a key part of our aggressive growth plans in China and Asia." Ford will introduce 15 new vehicles in China by 2015.

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-- Written by Ted Reed in Charlotte, N.C.

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