China dethroned the United States as the world's largest auto market in 2009 with 13.6 million vehicles sold. It's the first time since Henry Ford's assembly line created a mass market for cars and trucks last century that a country other than the United States led the world in auto sales.
China sold more cars than the United States every month last year, except for August when the popular "Cash-for-Clunkers" program bolstered U.S. sales. China's auto sales, which also were boosted by government incentives, nearly doubled in December, rising 92% from a year earlier to 1.41 million vehicles, the China Association of Automobile Manufacturers said yesterday (Monday).
Roughly 10.4 million light vehicles were sold in the United States in 2009 - the lowest total since 1982 and a 21% decline from 2008. That number doesn't include the sale of heavy commercial vehicles, whereas China's total does. However, just 500,000 heavy commercial vehicles were sold the United States last year, CSM Worldwide analyst Yale Zhang told The Wall Street Journal. That would still leave U.S. sales short of China's mark.
In the New Year, China may not be able to replicate the brisk rate of growth that its auto market experienced in 2009. But the Asian giant is likely to retain its top spot throughout 2010. Some analysts forecast overall auto sales this year to rise as little as 5% to 6%, according to The Journal. Some automakers, on the other hand, have more optimistic growth expectations of 10% to 15%.
"A car has become the new ‘must have' for lots of households," one Chinese car company executive told The Financial Times. "Buying a car has become the most desirable thing to do to prepare for Chinese New Year or a big holiday. This is definitely not the end of the buying trend."
However, auto companies will be getting a little less help from Beijing this time around. At the beginning of last year, the central government cut the sales tax on vehicles with smaller engines from 10% to 5%, which helped drive 2009 sales. The tax will be raised to 7.5% this year, possibly tapping the brakes on the market. A decline in stimulus measures across the board could also dent sales, as businesses cut back on equipment purchases.
Still, the Chinese market for cars remains red hot and it's where the world's biggest automakers will look to leave a mark this year.
For instance, Ford Motor Co. (NYSE: F) said Thursday that sales in China from its local joint ventures and imports rose 44% to a record 440,619 units, whereas the company's U.S. sales dropped.
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