UPDATE 1-China auto market growth slows sharply in January

Thu Feb 13, 2014 4:07am EST

* Commercial vehicle sales, holiday timing blamed
    * Passenger vehicle sales up 7 percent from year ago
    * Industry body opposed to changes in foreign investment
rules
    * If rules change, local brands would be "killed in the
cradle"-CAAM

 (Adds analyst quotes, detail)
    BEIJING/SHANGHAI, Feb 13 (Reuters) - Growth in China's auto
market slowed to 6 percent in January, a third of the rate seen
in December, partly weighed down by sluggish sales of commercial
vehicles likes trucks and buses.
    The relatively slow growth in the world's biggest auto
market was also due to the week-long Chinese New Year holiday,
or Spring Festival, starting at the end of January that resulted
in fewer working days compared with 2013, analysts said. Most
dealers close during the holiday, which fell in February last
year.
    The China Association of Automobile Manufacturers (CAAM)
said on Thursday passenger vehicle sales rose 7 percent from a
year earlier while commercial vehicle sales, which make up
around 15 percent of the entire auto market, were virtually
flat.
    "Companies typically don't invest much on commercial
vehicles at the start of a year, and that was much more evident
in January this year due to the timing of the Spring Festival,"
said Wan Dong, analyst at Capital Securities.
    The overall market grew 17.9 percent in December last year
and ended the 2013 year with a growth rate of 13.9 percent.
    CAAM last month said the auto market would likely grow 8-10
percent in 2014, echoing views from industry experts and
analysts that 2014 would be another strong year for China's auto
market. 
    Foreign carmakers like General Motors Co, Ford Motor
Co and Toyota Motor Corp reported double-digit
growth in January, but some local players like Geely Automobile
Holdings Ltd, posted sharp declines.
    CAAM, whose members include China's biggest automakers like
SAIC Motor Corp Ltd and FAW Group, reiterated its
opposition against any relaxation of foreign investment rules in
the auto industry as indicated by several policymakers.
    The Ministry of Commerce told a media briefing in November
that the government would likely relax foreign investment
restrictions soon in areas including auto manufacturing.
    Currently, foreign ownership in a Chinese joint venture is
capped at 50 percent.
    "If China relaxes foreign ownership rules, it would be
devastating to China's indigenous brands," CAAM, one of China's
biggest industry associations, said in a statement. "Chinese
local brands would be killed in the cradle."
    China has required global automakers to form joint ventures
in order to produce cars in the country, hoping that Chinese
carmakers can absorb foreign technology and management expertise
to become more competitive.
    

 (Reporting by Sally Huang and Jonathan Standing in BEIJING and
Samuel Shen in SHANGHAI; Editing by Kazunori Takada and Matt
Driskill)
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