China Apr car sales still solid, India best in decade

SHANGHAI/NEW DELHI - Car sales in China and India, the world's two fastest growing major markets showed solid growth in April as government incentives and strong economic expansion continued to pull buyers into showrooms.

In China, which eclipsed the United States as the world's biggest auto market last year, passenger car sales in April rose 33.2 percent from a year earlier, slowing from a 63.2 percent jump in March when a much lower year-ago base of comparison inflated the growth rate.

Slower growth is inevitable as it's impossible for automakers to replicate the 70 percent-plus monthly growth seen in the latter part of 2009. But the April figure is still pretty solid and much better than many had anticipated, said Sheng Ye, associate research director at industry consultancy Ipsos' Greater China region.

Car sales in India posted their strongest April in at least a decade, jumping an annual 39.5 percent, showing consumer demand in one of the world's fastest growing markets remained robust despite a rise in prices.

The outlook for this year looks good -- incomes are rising, there is optimism about the economy, people are more secure about their jobs and there is a lot of choice in terms of models available, said Preet Mohan Singh, executive director of Avendus Capital.

By comparison, U.S. sales rose by a fifth in April, while UK sales rose 11.5 percent and German sales fell almost a third in the same month following the removal of state stimulus measures.

CHINA GROWTH FORECASTS RISING

China has been a major bright spot for global automakers amid a sharp industry downturn, propelled by government incentives to boost consumption along with a near $600 billion economic stimulus plan.

From January to April, car sales in the country jumped 63.6 percent to 4.63 million units, following a 76.3 percent gain in the first quarter, data provided by the official China Association of Automobile Manufacturers showed on Monday.

Analysts and auto executives had previously predicted full-year 2010 growth in car sales of 10-15 percent, but many have revised their forecast upward recently.

Chery Automobile, known for one of the country's best-selling compact car QQ, expects to sell 700,000 units this year, up 40 percent from 2009, twice as fast as the market growth, its spokesman Jin Yibo recently told Reuters.

Government incentives have lowered the bar for car ownership in the past years. There is still a lot of growth potential in smaller cities and rural areas, Jin said.

China, where car sales sped past 10 million units for the first time last year, also remains a safe haven for giants such as General Motors, Ford Motor and Toyota Motor which are gradually climbing out of a global recession.

Strong automobile demand may even prompt the Chinese government to scrap the sales tax incentives next year, although the subsidies for auto buyers in rural areas will remain intact, Fu Yuwu, executive vice president and secretary general of Society of Automotive Engineers of China, told Reuters.

INDIA SALES AT MULTI-YEAR HIGH

Domestic car sales in India were 143,976 in April, up from 103,227 in the same month last year, SIAM data showed, led by Maruti Suzuki which sold 80,034 units.

Vishnu Mathur, newly appointed director general of the Society of Indian Automobile Manufacturers (SIAM), said sales were likely to be sustained in a rapidly growing economy with easy availability of finance and improved consumer sentiment.

Buyers are usually subdued in April after bunched purchases at the close of the financial year in March to take advantage of tax breaks on depreciation.

But concerns for the industry are rising costs of raw materials such as pig iron and steel, and price increases to account for new emission standards. (Additional reporting by Jacqueline Wong in SHANGHAI; Editing by Lincoln Feast)