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UPDATE 1-China vehicle sales to ride on green cars, SUVs to 6 pct growth in 2016
January 12, 2016 / 9:12 AM / 2 years ago

UPDATE 1-China vehicle sales to ride on green cars, SUVs to 6 pct growth in 2016

* Beats 2015 forecast of 3 percent growth

* Macro economy pressure to continue

* Green car, SUV sales to maintain rapid growth (Recasts with 2016 forecast, adds comments on macro economy, green cars and SUVs)

By Meng Meng and Jake Spring

BEIJING, Jan 12 (Reuters) - China vehicle sales are expected to grow 6 percent in 2016, accelerating from last year on more green cars and sport-utility vehicles even as macro economic pressure continues to bite, an auto industry body said on Tuesday.

Vehicle sales growth ground to a halt in mid-2015 as the economy expanded at the slowest rate in 25 years and the stock market slumped, although car sales rebounded late in the year after the government cut taxes on small engine cars from October.

The China Association of Automobile Manufacturers said macro economic pressures were unlikely to change in 2016, with investment levels, manufacturing activity, inflation and other economic indicators likely to continue weakening.

Last year’s 4.7 percent rise in vehicle sales overshot the association’s 3 percent forecast, a downward revision from its initial prediction of 7 percent growth for 2015.

Auto sales grew 6.9 percent in China in 2014.

“If only there’s no stock market disaster in 2016, then the market will not get any worse,” said Yale Zhang, managing director of Automotive Foresight.

Car exports will decrease 10 percent while imports will fall 20 percent in 2016, the association said.

Green car and sports-utility vehicle (SUV) sales will however remain bright spots for the industry this year.

Battery electric and hybrid vehicles will double to 700,000 vehicles, the association said. SUV sales are set to rise 36 percent this year, it said.

Sales of so-called new energy vehicles quadrupled in 2015, thanks to government subsidies and other preferential policies.

Overall sales have strongly rebounded since the government halved sales taxes on cars with engines under 1.6 litres in October, although analysts say the policy move may only undercut longer term growth once it expires at the end of this year.

In December, vehicle sales in the world’s largest auto market rose 15.4 percent from a year earlier to 2.8 million units.

The country’s vehicle sales totaled 24.6 million units last year.

Reporting by Meng Meng and Jake Spring; Editing by Ryan Woo and Biju Dwarakanath

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