Sales totaled 640,000 units during the quarter, said the China Association of Automobile Manufacturers (CAAM).

Zhu Yiping, an official from the association, said on Friday strong demand for passenger cars was the main cause of the robust sales growth.

Passenger car sales during the quarter increased by 23.2 per cent to 191,300 units from the same period last year, Zhu said.

Around 83,200 cars were sold last month, an increase of 31.4 per cent from a year earlier, she said.

"A slew of price cuts made by domestic carmakers driven by China's sharp tariff cut on auto imports played a critical role in jacking up sales," Zhu said.

Major local carmakers, such as the First Automotive Works, Tianjin Automotive Industry Corp, Shanghai General Motors (GM) and Shanghai Volkswagen, began slashing prices of their products at the end of last year to struggle for market share and to ease tariff cut pressures.

The most aggressive action was taken by Shanghai GM, which lowered the price of one of its 2.5-litre Buick sedan by 30,000 yuan (US$3,600) at the end of January.

The company said it sold 9,558 units during the first quarter, including the sale of 3,594 Sail compact cars.

China decreased tariffs from 70-80 per cent to 43.8-50.7 per cent on January 1, the biggest cut after the nation's accession to the World Trade Organization in December.

Zhu was supported by Xu Changming, an industry analyst from the Beijing-based State Information Centre, who said: "These price cuts have dispelled consumers' strong wait-and-see sentiment and opened their purses."

Many consumers postponed buying cars since last September in expectation for further price decreases on the domestic market as a result of the tariff cut, Xu said.

Su Hui, general manager of the Beijing Asian Games Village Automobile Exchange, said the scenario indicated that prices "still weigh most heavily for consumers."

Vehicle sales by his company, one of the largest in Beijing, exceeded 13,000 units during the first quarter of the year.

Zhu said sales of passenger cars priced between 100,000-150,000 yuan (US$12,100-18,100) accounted for a quarter of total car sales during the period.

Constant new product launches made by carmakers beginning at the end of last year, offering more choices to consumers, also helped increase vehicle sales during this quarter, Xu said.

New products include the Bora mid-sized sedan of FAW Volkswagen, the Sail small recreational vehicle of Shanghai GM and the Palio compact car of Nanjing Fiat, a joint venture between Yuejin Motor Group and Italian carmaker Fiat SpA.

Zhu said auto sales last month posted the biggest growth month-by-month during the first quarter of the year, with sales increasing by 83 per cent to 291,000 units from February, Zhu said.

The total auto output during the first quarter amounted to 657,000 units, up 18.9 per cent from a year earlier, she said.

Output last month increased by 22.5 per cent year-on-year to 286,000 units, according to the CAAM official.

(China Daily April 15, 2002)