China auto sales growth 'to slow sharply'

Auto sales in China, the world's largest vehicle market, are expected to hit the brakes this year despite showing a slight rebound in June, an industry group said Friday. The China Association of Automobile Manufacturers said it expects sales to grow five percent in 2011 compared with its earlier forecast for 10-15 percent growth -- much lower than the more than 32 percent rise recorded last year. "In the second half of the year, China's auto market still faces many uncertainties," the semi-official industry group said in a statement, adding full-year commercial vehicle sales could decline from 2010. Auto sales rebounded in June -- rising 1.4 percent year-on-year to 1.44 million units -- after falling for two straight months as authorities removed stimulus measures and major cities tried to reduce car numbers. First-half vehicle sales rose 3.35 percent to 9.33 million units, CAAM said. June passenger car sales rose 6.2 percent from a year earlier to 1.11 million units while commercial vehicle sales fell more than 10 percent in the month, it said. China, which overtook the US to become the world's top auto market in 2009, has become increasingly important for global players. Auto sales in China rose more than 32 percent last year to a record 18.06 million units. But the sector has since lost steam after Beijing phased out sales incentives such as tax breaks for small engine vehicles introduced to ward off the impact of the global financial crisis. The State Council, or cabinet, is considering introducing new incentives to revive the auto industry, the official Xinhua news agency said last week. While authorities are unlikely to scrap limits on the number of new cars in Beijing, they would discourage other cities making similar moves, the report added.