A rebound in Chinese auto sales. Since this is now the second largest car market in the world, it matters.

We earlier argued that car and housing sales were at unsustainably low levels in the US. There might be a rebound some time this year there too

China auto sales rise 70% in Jan from the Wall Street Journal
By GORDON FAIRCLOUGH
SHANGHAI — Auto sales in China jumped by more than 70% in January, according to an industry trade group, putting the country on track to widen its lead over Japan as the world’s second-largest vehicle market this year.

Preliminary figures show that Chinese car dealers sold nearly 340,000 vehicles last month, up from 194,907 a year earlier, according to the China Passenger Car Association. General Motors Corp. cars were the biggest sellers, the association said.

China’s car market has surged as incomes rise and car prices fall. Last year total vehicle sales were up 14% to 5.89 million, according to another trade group, the China Association of Auto Manufacturers. Sales of locally made passenger cars rose 27% to 3.1 million.

“There’s no reason to think this current momentum will slow,” says Michael Dunne, president of Automotive Resources Asia, a consultancy. “This could go on for a while.”

Mr. Dunne is forecasting 15% growth in passenger-car sales this year. That would lift total vehicle sales to about 6.2 million. In 2005, Japan recorded sales of about 5.85 million vehicles, nearly unchanged from 2004. The U.S. is the world’s largest vehicle market.

Chinese car sales hit a speed bump in 2004, as cars targeted at China’s still-limited pool of affluent, middle-class consumers failed to find enough buyers. Some potential buyers were also discouraged by tightened credit standards and higher gas prices, analysts say.

The current sales-growth spurt, however, is being driven in large part by demand for inexpensive cars. Chinese shoppers can now choose among an increasing number of models that sell for less than $10,000.

A GM joint-venture company, for example, last year sold more than 310,000 budget Wuling minivans, which go for roughly $6,000. “We are selling everything we can make every month,” says Jay Cooney, a GM spokesman.

Rao Da, secretary general of the China Passenger Car Association, attributed the strong results in January, usually one of the slowest sales months of the year, to consumers’ apparent belief that manufacturer price-cutting had come to an end. Car prices remained fairly steady in December and January, he said.

Some car makers had been marking down vehicles amid intense competition. Chinese government officials have expressed concern that there is a glut of car-making capacity in China. China’s annual production capacity is about eight million vehicles.

Mr. Rao said that Volkswagen AG ranked second behind GM in terms of sales, while Chery Automobile Co. was the leading Chinese domestic car maker.

—– Jathon Sapsford in Tokyo and Ellen Zhu in Shanghai contributed to this article.