China auto sales jump 78 percent in September

China has widened its lead over the U.S. as the world's top auto market, with September sales vaulting 78 percent, spurred by tax cuts and government stimulus spending.

Sales totaled 1.33 million vehicles last month, with passenger cars climbing 84 percent, the China Association of Automobile Manufacturers reported. It was the seventh month that China's auto sales surpassed 1.1 million vehicles.

Sales in smaller cities have been booming as automakers rush to woo first-time car buyers. Those trends have global automakers looking to the world's most populous nation to drive revenues as demand in other big markets remains sluggish.

China, with 1.3 billion people, has long been expected to overtake the United States as the biggest vehicle market. But the U.S. economic slump hastened that shift by depressing American sales while China surged ahead.

The nation now leads the world in sales, with 9.66 million vehicles selling over the first nine months of the year, up 34 percent from the same period last year. The U.S. ranks second, with January-September sales at about 7.8 million cars and light trucks, according to Autodata Corp.

GM's Buick Excelle, Hyundai's Elantra sedan, the Toyota Camry and VW Jetta are among perennial best sellers. But the compact F3 sedan made by China's BYD Autos has been a top selling model for at least three months this year

After a sharp slowdown late last year, the Chinese government halved taxes on purchases of small autos. It is spending 5 billion yuan (about $730 million) on subsidies for purchases of light trucks and minivans in the countryside, where most of China's people live.

In the meantime, a 4 trillion yuan ($586 billion) economic stimulus package has pumped money into construction and other projects, helping to blunt the impact of the global slowdown and spur a recovery.

"The China market has benefited from economic stimulus that has generated primary demand. We see substantial opportunities in product-driven, competition-driven growth," General Motors Co.'s chief executive, Fritz Henderson, told reporters in Shanghai on Tuesday.

Economic growth was 7.9 percent in the second quarter, boosting confidence that growth will at least match and possibly exceed the government's 8 percent target for the year.

GM saw total sales for January-September surge 55 percent to nearly 1.3 million vehicles. Ford Motor Co. said sales rose 32 percent in the first nine months of the year to 316,639 units, with sales in September jumping nearly 80 percent from the year before.

Other foreign automakers have reported similar, hefty double-digit sales growth.

China's is on track to surpass the U.S. is sales for the year, Henderson said, "and its importance for us and our joint venture partners should not be underestimated."

September U.S. sales fell 23 percent from a year earlier. And they dropped 41 percent from August, when big discounts subsidized by the U.S. government fueled a summer buying spree.

Despite China's growth, September sales were far from a U.S. sales peak of 1.8 million vehicles in July 2005, according to Ward's AutoInfoBank. Industry analysts don't expect U.S. sales to return to that level for many years.

GM's Henderson predicted a "very modest recovery" in 2010 for the U.S. market.

Overall, cars with engines smaller than 1.6 liters accounted for 70 percent of passenger car sales in September, the Chinese auto association said.

GM's investment in a mini vehicle joint venture, SAIC-GM-Wuling, has benefited enormously from the government's promotion of small vehicles. The venture sold 100,635 vehicles in September, boosting total sales for the first nine months by 64.5 percent.

A handful of the biggest state-owned automakers, such as GM and Volkswagen AG's partner, Shanghai Automotive Industrial Corp., are thriving on partnerships that have helped them ramp up capacity while acquiring technology and managerial know-how.

Volkswagen, one of the earliest entrants in the market, and GM have traditionally dominated sales, though major independent automakers, such as Geely Automobile, Chery Automobile and BYD Autos have taken significant market shares of their own. BYD has backing from billionaire investor Warren Buffet's MidAmerican Energy Holdings Co.

Direct comparisons between the Chinese market and others are complicated by the fact that trucks and buses make up a larger share of China's sales than those of the United States or Japan.

The larger sales figures for China also obscure the fact that most of the country's dozens of automakers are small manufacturers serving mainly regional markets.

So far, none of China's domestic car manufacturers have managed to meet rigorous U.S. safety standards, and most Chinese vehicle exports go to other developing markets in the Middle East, Latin America and Africa.

China's auto exports totaled only 30,000 units in September, the China Association of Automobile Manufacturers reported, down nearly 37 percent from a year earlier. For the year, exports have fallen 57 percent from the same period last year, to 217,400.

---

AP Auto Writer Tom Krisher in Detroit contributed to this report.