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March 11th 09, 01:01 PM

China February Auto Sales Rise 25% After Tax Cuts

March 10 (Bloomberg) -- China vehicle sales surged 25 percent in
February, the first gain in four months, after the government cut
taxes on some models, helping the country extend its lead as the
world’s largest auto market this year.

Sales of passenger cars, buses and trucks climbed to 827,600, the
China Association of Automobile Manufacturers said today in Beijing.
The tally in the first two months rose 2.7 percent to 1.56 million,
compared with a 39 percent decline to 1.35 million in the U.S.

China has halved retail taxes on small cars and drawn up plans to give
out vehicle subsidies in rural areas to revive demand after auto sales
rose at the slowest pace in a decade last year. Combined with the
country’s wider 4 trillion yuan ($585 billion) economic stimulus
package, the policies have caused General Motors Corp. to roughly
double its forecast for China’s nationwide auto market growth this

“Consumers are regaining confidence because of the government’s
stimulus policies,” said Ricon Xia, an analyst at Daiwa Research
Institute in Shanghai. “Still, vehicle sales may fluctuate in the
coming months.”

Sales this month will likely be better than in February, Xiong
Chuanlin, vice secretary-general of the automakers group, told
reporters in Beijing today. The body is “cautiously optimistic” about
full-year sales, he added.