China Car Sales Stall as Economy Slows, Gas Prices Rise

China passenger-car sales had the worst start to a year since 2005 as the economy slowed and fuel prices rose. About 2.37 million passenger cars, including multipurpose and sport-utility vehicles, were sold in January and February, a 4.4% decline from the same two months last year, according to the China Association of Automobile Manufacturers. There were 2.95 million total vehicles sold, including trucks and busses, a 6% decrease. February sales increased 26.5 percent to 1.21 million cars as the Lunar New Year holidays were in January and there were more working days in the month. January sales were down 24 percent for a year earlier because of the holiday. When comparing annual sales January and February are usually combined because the Lunar New Year can fall in either month. Global car manufacturers fared better than local competition in the world's largest vehicle market as sales of local car brands, excluding minivans, multipurpose vehicles and SUVs, fell 17% and the market share of local brands decreased to 27.9%. Car manufacturers are hoping to counter years of declining European auto sales with growth in China. The top three best selling sedans of February were the General Motors GM Buick Excelle, the Volkswagon VOW Lavida and the GM Chevy Cruze, each selling more than 20,000 vehicles. General Motors February sales increased by 30% and Volkswagon's Audi unit increased sales 66% they reported earlier this month. Foreign companies may face more competitions as state agencies may limit the 412 models approved for sale this year to Chinese companies, according to a proposal from the industry ministry. Sales of dual-purpose vehicles, used for moving goods and people, decreased 12%. The numbers were boosted by school vehicle purchases, Zhang Xin, a Beijing-based Guotai Jun'an Securities analyst told the Associated Press. Schools were forced to expand their bus services following several accidents cause by overloading the vans. Vehicle sales rose about 2.5% in 2011, to 18.5 million, following years of double-digit growth. CAAM originally predicted passenger-vehicle sales would rise 9.5% in 2012. Gas prices in China rose to 9,417 yuan a metric ton, or $4.20 a gallon, Feb. 8, one of the factors attributed to declining car sales. U.S. fuel prices were $3.72 a gallon for the week of Feb.27 according to a report from the U.S. Department of energy. Targeted economic expansion for the country is 7.5%, the lowest level since 2004. Targeted economic expansion was 8% from 2005 to 2011.