* Car sales slow to 5.2 pct after incentives expire
* Foreign brands help China retain ranking as world's top
* Outlook may improve on demand in lower-tier cities
By Fang Yan and Ken Wills
BEIJING, Jan 12 Car sales in China climbed
5.2 percent in 2011, the slowest pace since the
nation's car culture took off at the turn of the century, as
consumers shunned local brands after Beijing scrapped tax
incentives for small cars.
Even so, solid demand for foreign marques helped China keep
its ranking as the world's top market, with total car sales of
14.5 million, about 2 million more than in the United States
The outlook for 2012 is expected to improve, thanks to
still-robust automobile demand in lower tier cities, which are
catching up with major metropolitan areas as major growth
engines, industry observers say.
"Local car makers were hurt in the past year after the
incentives were gone, but most overseas players remained in
pretty good shape," said Sheng Ye, associate research director
at industry consultancy Ipsos' Greater China region.
Beijing in 2009 introduced a stimulus package, including tax
incentives for cars with engine sizes of 1.6 litres or smaller,
a move that spurred car sales and propelled China to surpass the
United States as the world's largest auto market.
The incentives were scrapped in 2011, sending many who had
intended to pick a Chery or Geely car to get the perks, to the
showrooms of General Motors and Volkswagen.
Local government steps to tackle traffic gridlock, such as
imposing quotas on new car registrations in Beijing, also
crimped car sales. In the Chinese capital, new car deliveries
plunged 56 percent to 403,500 in 2011, official data showed.
Collectively, local brands made up 29.1 percent of car sales
in 2011, down 1.78 percentage point from a year ago,
according to the China Association of Automobile Manufacturers
German and U.S. brands, however, have both gained
ground, up by 1.91 and 0.77 percentage points,
While some industry insiders remain cautious on the 2012
outlook, many others, including Wang Fengying, president of top
Chinese SUV maker Great Wall Motor, and Xu Changming,
general director with the Information Resource unit of the State
Information Center (SIC), are betting on a 10 percent gain on
growth potential in smaller, inland cities.
CAAM forecast that car sales for 2012 would grow by 9.5
Statistics provided by the SIC showed tier 1 cities
contributed 30.7 percent of car sales in 2010, down from 35.7
percent in 2007, while the ratio in tier 3 cities has climbed to
29.1 percent from 24.7 percent during the period.
Still, only about 30 out of 1,000 people own cars
in the northwestern provinces such as Gansu and Qinghai now, a
far cry from more than 200 in the Chinese capital city,
according to Ipsos.
In December, passenger car sales rose 4.6 percent
to 1.37 million in China . Overall vehicle
sales for the full year, including trucks and buses, came to
18.51 million , up 2.5 percent, CAAM said.
In the United States, the 12.5 million light vehicle sales
in 2011 represented a 10.3 percent year-on-year rise.
In Japan, however, car sales plunged 16.7 percent last year
to a 43-year low due to production disruptions in the wake of
the devastating earthquake and tsunami in March and recent
flooding in Thailand.