Car sales on the mainland are soaring for the fourth consecutive month, as consumers prove more willing to spend on automobiles and prices continue to fall.

 

Government efforts to boost sales of smaller cars have proven unsuccessful, as compacts continue to lose market share to gas-guzzling SUVs, despite soaring fuel prices.

 

Chinese automakers sold 312,246 passenger vehicles, including sedans, sports utility vehicles and multi-purpose vehicles last month, a 45.1 percent increase from April 2005.

 

April was the fourth consecutive month sales have grown by more than 40 percent over the previous year. Car sales across the mainland are expected to hit a record 5 million units this year.

 

From January to April, car sales hit a record 1.68 million units, an increase of 58.8 percent or 600,000 units from a year earlier. Meanwhile, car output also jumped 51.5 percent to 1.75 million units for the first four months.

 

"We have achieved 18 percent growth in the passenger car sector for the first four months, beating the previous 17 percent forecast," said Rao Da, general secretary of the Union of National Passenger Car Market Information.

 

"The buoyant sales of passenger cars reflect the change in people's consumption thinking in addition to the booming economy in China, where the car population is still lower than Western countries."

 

Sales growth is also related to price cuts. The price of Volkswagen's Santana, its most popular model, dropped from 124,000 yuan in 2001 to 76,000 yuan in 2005.

 

Sales of low-priced compact cars, such as Chery Automobile Co Ltd's QQ, grew slower than the rest of the market.

 

Sales of SUVs grew by 94.6 percent during the first four months of the year, despite the government imposing an excise tax of up to 20 percent of large-engine vehicles.

 

(Shanghai Daily May 12, 2006)