General Motors (GM) has increased its forecast for auto sales in China this year following government initiatives aimed at boosting consumer confidence, Bloomberg reports today (6th March).

Lawmakers in Beijing announced in January that sales tax on vehicles with engines of up to 1.6 litres would be cut from ten to five per cent, while subsidies are being provided to rural residents to encourage car purchases.

With that in mind, GM, the biggest overseas automaker in China, has predicted the country's auto industry will grow by between five and ten per cent this year - up from a previous forecast of under three per cent.

Speaking to the news provider in a television interview in Shanghai, GM Asia Pacific President Nick Reilly commented: "China this year has started quite strongly. Some of this is a direct result of some of the government initiatives and others is because of the consumer confidence coming back again."

Furthermore, the company believes that it will outgrow the market by around three per cent, which explains its decision to ramp up its operations in China, in sharp contrast to its policies in the US.

Although GM's sales fell by 51 per cent in the first two months of 2009 and it is set to cut 47,000 jobs around the globe, it will remain strong in Asia as it rolls out fewer products in the region, according to Mr Reilly.

GM saw sales in China increase by six per cent in 2008, in comparison to the figure of 19 per cent for the previous 12 months.



Source:

GM Lifts China Forecast as Government Aids Auto Sales (Update2) (06/03/09)
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4mU34mzc3mg&refer=home