A senior figure at JP Morgan claimed yesterday (8th July) that China could be on the verge of another boom in auto sales, Reuters reports.

The country posted its first non-double-digit sales rise for almost a decade last year and most analysts were expecting a further fall this year in the current economic climate.

However, sales have increased by 21 per cent so far in 2009 and Frank Gong, JP Morgan Managing Director and China Economist, expects that trend to continue.

He told the news provider: "The strongest growth in car sales now is in third-tier cities and low-end cars. We believe this is the start of a third auto boom in China."

Transactions have been boosted by stimulus measures formulated in Beijing in January which target rural buyers and reduce tax on purchases of smaller, cleaner vehicles.

The rise in car sales hit 47 per cent in May alone on a year-on-year basis and automakers are now outlining plans to ramp up production in order to meet the growing demand.

According to Reuters, financial services firm Credit Suisse believes that just 2.9 per cent of the Chinese population own a car, a figure which is one of the lowest of any country.

However, it also expects the increased interest to bring about a 500 per cent rise in ownership over the next ten years, taking the total to 148 cars per 1,000 people by 2020.

Chinese automakers are responding accordingly, with Beijing Automotive competing for General Motors' Opel unit, while Italian firm Fiat has announced plans to commence production in the country.

Credit Suisse also believes that car sales in China will increase by 20 per cent this year and 15 per cent next year.

Source:

China car boom could last a few years - analysts (08/07/09)

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