China Auto Sales Off to a Strong Start

China topped the United States in auto sales for the first time ever last year, and it looks poised to keep its crown as the world's largest auto market this year as car sales in China got off to a strong start in the first quarter - soaring 76% from 2009.

Some 3.52 million cars were sold in China in the January-March period, according to the China Association of Automobile Manufacturers. The strong showing was partly the result of weak 2009 sales but it was enough to convince carmakers to raise their regional sales forecasts.

General Motors Corp., which leans heavily on its joint venture Shanghai General Motors Co. Ltd., said it would hit its target of 2 million sales in China this year, putting the company four years ahead of schedule.

GM's China sales jumped 71% in the first quarter to 623,546 vehicles. The company's sales in March alone soared 68% from last year to a monthly record of 230,048 vehicles. Meanwhile, GM's U.S. sales totaled just 188,546 units for the month.

"We already have an incredible focus on China and we're going to put as much energy as we can on China," said Kevin Wale, head of GM in China. "If we have a strong wind behind us we might get to 16 million units for the industry in China in 2010."

GM currently expects China auto sales will rise to 15.5-16 million units this year, but Chinese officials are even more bullish. The China Passenger Car Association anticipates sales will reach 17 million units.

China dethroned the United States as the world's largest auto market in 2009 with 13.6 million vehicles sold. Just 10.4 million light vehicles were sold in the United States in 2009 - the lowest total since 1982 and a 21% decline from 2008.

Wale says his company expects sales to exceed 3 million units by 2015.

Volkswagen AG (NYSE ADR: VLKAY) - which operates two joint ventures: Shanghai Volkswagen and FAW-Volkswagen - said it sold 457,259 cars in the first quarter of 2010. That's up 60.9% from a year earlier.

"The Chinese auto market maintained its impressive momentum of swift growth, benefiting from a strong economic recovery and a renewed incentive policy on the vehicle purchasing tax," said Winfried Vahland, president and chief executive of Volkswagen Group China. "The Volkswagen Group's strong performance in the first quarter of 2010 has exceeded our expectations. Together with our joint ventures, we will introduce and launch more new models than ever before in China this year."

Volkswagen launched two new models in March: the Tiguan, an urban sports utility vehicle, and Volkswagen Golf GTI, the first mass-produced sports car in China. Volkswagen delivered 133,425 cars for the month.

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