UPDATE 1-China Nov car sales up 29 pct, 2011 outlook dims

* Nov sales stronger than expected due to policy incentives

* Demand to say strong in Dec for same reason

* Market to slow in 2011 as incentives expire

* Toyota Nov sales up 17 pct, reversing 6 pct fall in Oct
(Adds analyst comments, market outlook, graphics, details)

By Fang Yan and Ken Wills

BEIJING, Dec 9 (BestGrowthStock) – Automakers in China shipped 29.3
percent more passenger cars to dealers in November, extending a
rebound that began in August as people rushed to showrooms before
incentives expire at the end of the year.

Demand would remain strong in December, industry observers
say, bolstered in part by aggressive year-end marketing campaigns
by automakers, but they predicted the market would slow sharply
in 2011.

“November sales are much stronger than what we had expected.
But it’s abnormal and cannot last,” said John Zeng, an analyst
with J.D. Power Asia Pacific.

“People just want to take advantage of the incentive before
it’s too late. That does not bode well for next year especially
for the small-car segment, which has enjoyed a bull run thanks to
the sales tax cut.”

Beijing unveiled tax incentives in 2009 for cars with engine
sizes of 1.6 litres or smaller, a move that helped China surpass
the United States as the world’s largest auto market that year.

The incentives had been scaled back since January this year
to get the market prepared for a phase-out starting from 2011,
industry insiders have said.

Earlier this week, a local newspaper reported that China will
scrap both the tax incentives and a 3,000 yuan rebate for fuel
efficient models in 2011. [ID:nTOE6B5028]

Drivers in Beijing may also be subject to congestion fees and
non-Beijing residents must own an apartment and get a parking
permit before they are allowed to buy a vehicle, as part of
government initiatives to tackle the city’s worsening pollution
and traffic gridlock. [ID:nTOE6B8036].

A total of 1.33 million sedans, sport utility vehicles and
multi-purpose vehicles were sold in November, the China
Association of Automobile Manufacturers (CAAM) said on Thursday.

That compared with 1.2 million wholesale car sales in
October, up 27.1 percent from a year earlier, the strongest
monthly gain since April, according to official data.

For a Graphic on monthly China car sales:


For a Graphic on top sales of automakers”


Ford Motor (F.N: ) was a winner last month, outperforming the
market with a 35 percent annual sales increase. Toyota Motor
(7203.T: ) reported a 17 percent sales gain, reversing a 6 percent
fall in October, thanks in part to the launch of its new Corolla
sedan made at its venture with FAW Group.

General Motors (GM.N: ), the biggest overseas automaker in
China, sold 11.2 percent more vehicles in the country in the
month over a year ago, compared with a 19.6 gain in October.
Sales of Geely Automobile Holdings (0175.HK: ) rose 24.5 percent
last month, down from a 37.2 percent rise in October.


China has been a major bright spot amid a global industry
that is still struggling from a steeper-than-expected downturn in

However, break-neck market expansion has started to taper off
since the second quarter as Beijing presses the brakes to keep
the economy from overheating.

A mild recovery since August merely reflects the cyclical
nature of the business, and many senior industry executives,
including Kevin Wale, president and managing director for GM
China operations, expect auto sales to return to a slower, but
more rational growth rate of 10-15 percent in 2011.

Joe Hinrichs, president for Ford’s (F.N: ) Asia and Africa
operations, and several other senior industry executives shared
the view. [ID:nTOE6AN08D]

Scrapping policy incentives and the Beijing city government’s
expected severe measures to tackle congestion will dim prospects
for the 2011 market outlook, analysts say.

“Policy incentives played a big role in bolstering auto sales
in China, and the absence of them will also have a big impact the
other way around,” said J.D. Power’s Zeng.

UPDATE 1-China Nov car sales up 29 pct, 2011 outlook dims