China widens lead over U.S. as world’s biggest automaker

SHANGHAI -- China widened its lead over the U.S. as the world's biggest auto market in January, with passenger car sales more than doubling to 1.32 million vehicles, an industry group reported today.

Spurred by tax cuts and other government stimulus measures, vehicle sales soared from the 735,000 reported in January 2009, when sales in the Chinese market first overtook those in the U.S.

January's passenger car sales were up 18 percent from December's 1.1 million vehicles sold.

Total vehicle sales, including larger vehicles, also more than doubled from last year to 1.66 million units, the China Association of Automobile Manufacturers said.

U.S. auto sales rose a modest 6 percent in January, but that was up from a 26-year low of 656,976 a year before.

Beijing spurred sales last year with a series of policies aimed at encouraging car owners to trade in older vehicles, in many case three-wheel trucks, for more fuel-efficient small cars.

That helped push total vehicle sales up 45 percent to an estimated 13.6 million in 2009, overtaking the American market as sales there languished.

The recovery in China's broader economy also buoyed demand, especially in inland regions that are growing more affluent as industries expand from the coastal areas to reach broader domestic markets.

The huge year-on-year jump in January reflected relatively weak sales and production a year earlier, when China's economy had slowed due to the global financial crisis.

Sales remained strong partly because families are buying cars ahead of the Feb. 14 Lunar New Year, the country's biggest holiday. But they could fall off once the holiday is past, analysts say.

"We need to keep an eye on the data for February and March," said Wei Chenggang, an analyst at Shanghai Securities, in Shanghai.

"Given expectations that inflation may rise, people may spend less. And sales growth will fall slightly compared with the dramatic rise last year," Wei said.

The auto industry group stood by its estimate for sales totaling at least 15 million this year. But it also cautioned against assuming January will be typical for the year.

"January does not tell us what the whole year will be like, since the broader economy faces various uncertainties," the association said in a statement.

-- The Associated Press